If Your Firm's Production Function Has Constant Returns to Scale

question 46

Multiple Choice

If your firm's production function has constant returns to scale and you increase all your inputs by 60%,then your firm's output will

• A)not change.
• B)increase,but by less than 60%
• C)increase by 60%
• D)increase by more than 60%.

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels of the organization.

Variable Cost

Expenses that vary directly with levels of output or production volume.

Spending Variance

The difference between the actual amount spent and the budgeted amount in financial management, often analyzed in cost accounting.

Employee Salaries

The regular compensation paid to employees for their labor or services, typically expressed as an annual amount or hourly wage.