A Firm Has a Production Function F(x, Y)= 2(x⁰

question 2

Multiple Choice

A firm has a production function f(x, y) = 2(x^0.90 + y^0.90) ⁵ whenever x > 0 and y > 0.When the amounts of both inputs are positive, this firm has

• A)increasing returns to scale if x + y > 1 and decreasing returns to scale otherwise.
• B)increasing returns to scale.
• C)decreasing returns to scale.
• D)constant returns to scale.
• E)increasing returns to scale if output is less than 1 and decreasing returns to scale if output is greater than 1.

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Definitions:

Extraordinary Items

Unusual and infrequent gains or losses that are reported separately on the income statement to provide a clearer picture of a company's ongoing operational performance.

Accounting Principle

A general rule or guideline that prescribes the methodology for recording financial transactions and preparing financial statements.

Asset Account

An accounting record that shows the amount of economic resources owned or controlled by an entity.

Liability Account

An account on the balance sheet representing obligations to pay money or deliver goods or services to another party in the future.