A Firm Produces One Output Using One Input

question 11

Multiple Choice

A firm produces one output using one input.When the cost of the input was $3 and the price of the output was $3, the firm used 6 units of input to produce 18 units of output.Later, when the cost of the input was $7 and the price of the output was $4, the firm used 5 units of input to produce 20 units of output.This behavior

• A)is consistent with WAPM.
• B)is not consistent with WAPM.
• C)is impossible no matter what the firm is trying to do.
• D)suggests the presence of increasing returns to scale.
• E)suggests the presence of decreasing returns to scale.

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Definitions:

Markdown

A reduction from the original or retail price of goods or services to increase sales or clear inventory.

Elan 200 Skis

A specific model of skis produced by the Elan brand, known for its performance and design.

Mark-up

Elevating the base cost of merchandise to reimburse for overhead activities and profit.

Markdown

A reduction from the original price of an item to increase its attractiveness to buyers.