A Firm Doubles the Quantity of All Resources It Employs

question 346

Multiple Choice

A firm doubles the quantity of all resources it employs and, as a result, output doubles. Which of the following is correct?

• A)There are increasing returns to scale.
• B)The long-run average total cost curve is flat.
• C)The law of diminishing returns is proven wrong.
• D)The example is for the short-run rather than the long-run.

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Definitions:

Horizontal Distance

The measurement of distance between two points along a straight line on the horizontal plane.

Consecutive Odd Integers

A sequence of odd numbers where each number is two more than the previous one.

Product

The result of multiplying two or more numbers together.

Inequality

A relation that holds between two values when they are different, represented by symbols that show if one value is less than, greater than, or not equal to another value.