(Appendix) the Defining Characteristics of Increasing Returns to Scale May

question 37

Multiple Choice

(Appendix) The defining characteristics of increasing returns to scale may be summarized as

• A)F(cK,cL) > cF(K,L).
• B)F(cK,cL) = cF(K,L).
• C)F(cK,cL) < cF(K,L).
• D)Q = min(aK,aL).

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Definitions:

Contribution Margin

A department’s net profit, used to cover indirect expenses.

Gross Profit

The difference between sales revenue and the cost of goods sold (COGS), indicating the basic profitability of a company's core activities.

Indirect Expenses

Expenses that are not directly tied to a specific product or service but are necessary for the overall operation of a business.

Direct Expense

A cost that can be directly attributed to the production or sale of specific goods or services in a business.