As a Firm with Decreasing Returns to Scale Technology Increases

question 16

Multiple Choice

As a firm with decreasing returns to scale technology increases its output,

• A) It will experience diseconomies of scale and its average cost of production will rise
• B) It will experience diseconomies of scale and its average cost of production will fall
• C) It will experience economies of scale and its average cost of production will rise
• D) It will experience economies of scale and its average cost of production will fall

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Definitions:

Adjusting Journal Entry

An accounting entry made to correct or update the financial records and ensure accurate reporting.

Liabilities

Financial obligations or debts that a company owes to external parties, which must be settled over time through the transfer of economic benefits.

Deferral

Accounting method to postpone the recognition of revenues or expenses until a future accounting period.

Journal Entry

A record in the accounting ledger that represents a transaction and its effect on various accounts, used for tracking and organizing financial data.