If a Firm Increases All Its Inputs by 10 Percent

question 167

True/False

If a firm increases all its inputs by 10 percent and its output increases by 15 percent, the firm is experiencing diseconomies of scale.

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Definitions:

Markdown

A reduction in the selling price of goods, typically to clear old stock or attract customers.

Breakeven

The point at which costs or expenses and income are equal, and there is no net loss or gain.

Mark-up

The amount added to the cost price of goods to cover overhead and profit; a percentage of the cost price.

Breakeven

A financial situation where revenue equals costs, resulting in neither profit nor loss.