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An experimenter announces, "This is an experiment on hypnosis." Although the experimenter does not actually hypnotize anyone, most of the participants behave the way they believe hypnotized people do. These results are an apparent example of the effects of
Returns to Scale
The rate at which output increases as inputs are proportionally increased, indicating either increasing, constant, or decreasing efficiency in production.
Long-Run Average Cost
The average cost per unit of output when all inputs, including capital, are variable, allowing for the adjustment of all factors in production to achieve the lowest cost.
Output
The quantity of goods or services produced in a given period of time.
Returns to Scale
The change in output resulting from a proportionate increase in all inputs (factors of production), where increasing, constant, and decreasing returns to scale can occur.
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