Suppose That a Firm,operating Efficiently,doubles the Size of Its Operations

question 65

Multiple Choice

Suppose that a firm,operating efficiently,doubles the size of its operations and discovers that,as a result,its average cost of production has fallen.What does this imply?

• A)Decreasing returns to scale are present.
• B)Increasing returns to scale are present.
• C)Constant returns to scale are present.
• D)No conclusion about returns to scale can be made.

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Definitions:

Test Bias

A characteristic of a test that produces different outcomes for different groups not directly related to the individual's abilities or knowledge.

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Reliability

The degree to which an assessment tool produces stable and consistent results over multiple administrations.

Predictive Validity

The extent to which a score on a scale or test forecasts or correlates with a future behavior, outcome, or criterion.