If a Firm Increases All of Its Inputs by 10

question 291

Multiple Choice

If a firm increases all of its inputs by 10 percent and its output increases by 15 percent, then

• A)it is encountering diseconomies of scale.
• B)it is encountering economies of scale.
• C)the law of diminishing returns is taking hold.
• D)the firm's long-run ATC curve will be rising.

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Definitions:

Perfectly Price Discriminate

A situation where a seller charges each buyer their maximum willingness to pay, capturing all consumer surplus as profit.

Surplus

A condition where the supply of a product or service surpasses its demand at the existing price.

Monopolist

A Monopolist is a market participant who has exclusive control over the market for a particular good or service, facing no competition.

Perfectly Price Discriminate

A theoretical pricing strategy where a seller charges the maximum possible price that each consumer is willing to pay.