If There Are Large Fixed or Research and Development Costs

question 30

Multiple Choice

If there are large fixed or research and development costs, such as in the pharmaceutical industry, production can be characterized by:

• A) negative costs.
• B) constant returns to scale.
• C) decreasing returns to scale.
• D) large variable costs.
• E) increasing returns to scale.

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Definitions:

Variable Expenses

Costs that change in amount and type, depending on activities and choices, such as eating out, entertainment, and travel.

Fire Extinguisher

A portable device used to put out small fires by discharging a substance that cools the burning material, deprives the flame of oxygen, or interferes with the chemical reactions occurring in the flame.

Positive Activities

Actions or pursuits that contribute to well-being and happiness, often involving physical, mental, or social engagement.

Self-confidence

The state of trust in one's abilities, qualities, and judgment.