Asked by Michael Hawthorne on May 02, 2024
Verified
A firm that has lower costs per unit as it increases production in the long run has:
A) increasing returns to scale.
B) decreasing returns to scale.
C) increasing opportunity costs.
D) scale reduction.
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.
- Determine the scale of returns (increasing, constant, or decreasing) from changes in production output.
Verified Answer
Learning Objectives
- Determine the scale of returns (increasing, constant, or decreasing) from changes in production output.
Related questions
The Slope of a Long-Run Average Total Cost Curve Exhibiting ...
Michael's Dairy Farm Production Function Is Given by Where ...
Apu's Squishy Production Function Is Where K Is the ...
Bridget's Brewery Production Function Is Given by Where K ...
Many Mining and Mineral Extraction Processes Tend to Exhibit Increasing ...