Decreasing Returns to Scale Production Functions Must Be Concave

question 14

True/False

Decreasing returns to scale production functions must be concave.

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Definitions:

Variable Cost

A cost that changes in proportion to the level of output or activity.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Marginal Cost

Marginal Cost is the increase or decrease in the total cost of production resulting from producing one additional unit of a product.

Variable Cost

Refers to expenses that change in proportion to the production output or activity level of a company.