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SCENARIOS Etruscan Railing Company

question 91

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SCENARIOS
Etruscan Railing Company
Etruscan Railing Company makes railing that is used in sports arenas,down nursing home corridors,in queue houses at amusement parks,and many other places that are not as obvious.Its railing is molded into bicycle racks.You may also see city governments using the railing to make walkways over ravines and creek banks safer for pedestrian traffic.Hospitals also use the railing in their physical therapy departments,to keep the lines straight in the hospital cafeteria,and to prevent patients from falling out of hospital beds.
-Refer to Claxton Fruitcakes.For a corporation that has been giving its key customers Claxton fruitcakes since 1950,placing the order for cakes to be delivered this year would be an example of a _____ situation because some negotiation about price and quantity must occur each year.

Definitions:

Constant Returns to Scale

A situation where increasing all inputs by a certain factor results in output increasing by the same factor, indicating proportionate scalability of production.

Increasing Returns to Scale

Occurs when an increase in all inputs by a certain percentage causes a more than proportional increase in output.

Decreasing Returns to Scale

Decreasing returns to scale occur when an increase in all inputs leads to a less than proportional increase in output, showing that the firm becomes less efficient as it scales up production.

Increasing Opportunity Costs

A situation where the cost of forgoing the next best alternative increases as more resources are devoted to an activity.