Decreasing Returns to Scale Imply

question 113

Multiple Choice

Decreasing returns to scale imply:

• A)decreasing long run average cost and increasing short-run average cost.
• B)increasing long run average cost.
• C)constant long run average cost.
• D)increasing long run average cost and decreasing short run average cost.

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Definitions:

Accumulated Depreciation

The cumulative total of depreciation charges applied to a fixed asset from the time of its acquisition.

Machinery

Machines or automated systems used in the manufacturing process or to carry out various tasks. Machinery is considered a long-term, fixed asset in accounting.

Straight-Line Method

A depreciation method that allocates the cost of an asset evenly over its useful life.

Obsolescence

The process of becoming outdated or no longer used, often because of advancements in technology.