If a Firm Doubles Its Usage of All Inputs,and Output

question 63

Multiple Choice

If a firm doubles its usage of all inputs,and output more than doubles,the production function is said to exhibit:

• A)increasing returns to scale.
• B)decreasing returns to scale.
• C)constant returns to scale.
• D)increasing marginal returns to a fixed factor of production.

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Definitions:

Underwriter

A professional who assesses and accepts the risk of an insurance policy or security, determining pricing and coverage.

Direct Costs

Expenses that can be directly tied to the production of specific goods or services, such as raw materials and labor.

Amortization

The gradual reduction of a debt or the spreading out of capital expenses for intangible assets over a specific period of time, often through regular payments.

Flotation Costs

The expenses incurred by a company in issuing new securities, including fees for underwriters, legal counsel, and registration.