Under What Circumstances Does an Increase in Inputs by X

question 121

Multiple Choice

Under what circumstances does an increase in inputs by x percent result in an increase in output of less than x percent?

• A)Diseconomies of scale.
• B)Constant returns to scale.
• C)Economies of scale.
• D)Minimum efficient scale.

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Definitions:

Operating Efficiency

A measure of how well a company uses its resources to produce outputs, often assessed by comparing inputs to outputs in production processes.

Absorption Costing

An accounting method that includes all manufacturing costs, direct and indirect, in the cost of a product.

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and tax as well as income from non-operating activities.

Variable Costing

A method of costing that includes only variable production costs (direct material, direct labor, and variable overhead) in the cost of goods sold.