Suppose Farmer Smith Hires 4 Workers and Leases 2 Tractors

question 125

Multiple Choice

Suppose Farmer Smith hires 4 workers and leases 2 tractors and 15 hectares of farmland for one growing season,and produces 120 000 bushels of crop.The next year he hires 8 workers and leases 4 tractors and 30 hectares of farmland,and produces 240 000 bushels of crop.This firm (the farmer) is exhibiting ________ returns to scale.

• A)decreasing
• B)increasing
• C)constant
• D)marginal
• E)variable

Understand the concept of price sensitivity and how it affects the success of certain pricing strategies.

Appreciate the psychological aspects of pricing, such as odd-even pricing, and their effects on consumer behavior.

Identify the factors that indicate the effectiveness of penetration pricing for new products.

Understand the purpose and application of price lining within product categories.

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Definitions:

Purchase

The act of buying goods or services, often reflected in the financial transactions of a business.

Sale

A transaction between two parties where the buyer receives goods, services, or assets in exchange for money.

Equity Interest

An ownership interest in a company, represented by stock or shares, entitling the holder to a claim on assets and profits.

Cash Dividend

A payment made by a company out of its profits to its shareholders in the form of cash.