A Production Function Exhibits Decreasing Returns to Scale When You

question 93

Multiple Choice

A production function exhibits decreasing returns to scale when you:

• A) double each input-you double the output.
• B) double each input-you more than double the output.
• C) double each input-you less than double the output.
• D) double one input-you double the output.
• E) hold inputs constant-you double the output.

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Definitions:

Substitute Products

Goods and services that can be used in place of each other based on their utility and functional qualities.

Covert Collusion

A form of collusion that occurs in secret or is hidden, where competing firms in an industry agree to control prices or market shares without public knowledge.

Secret Conspiracies

Covert plans made by a group with the intent to do something unlawful or harmful, often in a political context.

Price Leadership

Price leadership occurs when a leading firm in an industry sets the price of goods or services, and other firms in the market follow suit, often seen in oligopolistic markets.