If an Increase of an Equal Percentage in All Factors

question 67

Multiple Choice

If an increase of an equal percentage in all factors of production results in an increase in output of the same percentage, then a production function has the property called:

• A) constant marginal product of labor.
• B) increasing marginal product of labor.
• C) constant returns to scale.
• D) increasing returns to scale.

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Definitions:

Marginal Cost

The growth in total expenses incurred from the production of one more unit.

Output

The total amount of goods or services produced by a firm or country.

Demand

How much of a good or service that consumers can and want to buy, influenced by differing price levels.

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs, representing the surplus generated from economic activities.