The ABC Corporation Decreases All of Its Inputs by 12

question 154

Multiple Choice

The ABC Corporation decreases all of its inputs by 12 percent and finds that its output falls by only 8 percent. This means that initially it was producing

• A) in the range of diseconomies of scale.
• B) in the range of economies of scale.
• C) where AP is less than MP.
• D) at the point of minimum efficient scale.

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Definitions:

Promissory Estoppel

A legal principle that prevents a promisor from denying the promise or going back on it if the promisee has reasonably relied on the promise to their detriment.

Promisee

The individual or entity to whom a promise or commitment is made in an agreement.

Reliance

Acting based on trust in something or someone, or in contract law, actions taken based on a promise or agreement.

Contract Modifications

Contract modifications are changes or amendments to the terms of an existing contract, agreed upon by all parties involved.