Suppose a Firm Uses Only Capital and Labour to Produce

question 63

Multiple Choice

Suppose a firm uses only capital and labour to produce output.When the firm doubles the amount of both inputs,output increases by less than double.This firm exhibits

• A) Increasing returns to scale
• B) Decreasing returns to scale
• C) Constant returns to scale
• D) Diminishing marginal returns

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Definitions:

Stock Repurchase

A program by which a company buys back its own shares from the marketplace, usually to increase the value of remaining shares.

Excess Cash

Excess cash refers to the amount of cash holdings that exceed what a company needs for its operational requirements, often invested or returned to shareholders.

Repurchase Prices

The cost at which a company can buy back shares or securities from the market or shareholders.

Market Prices

The current the current price at which an asset or service can be bought or sold in a particular market.