Asked by chess for giants on Sep 24, 2024
Verified
You would expect that your firm is experiencing a constant returns to scale if
A) Long run average costs increase with output
B) Long run average costs decrease with output
C) Long run average costs are constant with respect to output
D) None of the above
Long Run
A period during which all inputs, including capital and labor, can be adjusted by firms. It is characterized by the flexibility of adjusting to conditions without any fixed constraints.
Average Costs
It's the cost associated with producing each unit, found by dividing the entire production expenses by the number of units produced.
Returns to Scale
The rate at which output increases as inputs are increased proportionally, indicating how efficiently larger production scales affect production volume.
- Analyze the influence of returns to scale on the long-term average costs.
Verified Answer
Learning Objectives
- Analyze the influence of returns to scale on the long-term average costs.
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