Asked by Devante Starks on Jun 16, 2024
Verified
Refer to Scenario 7.3. Suppose that your firm decides to double its output to 400. To achieve this level of output the firm will have to:
A) exactly double its inputs.
B) more than double its inputs.
C) less than double its inputs.
Production Function
An economic model that describes the relationship between inputs used in production and the resulting output.
Double Its Inputs
The act of a firm increasing the amount of inputs used in production, such as labor and capital, by two times.
Level of Output
The quantity of goods or services produced by a firm or economy during a specific time period.
- Comprehend the principle of economies of scale and scope.
- Understand the role of scale economies and cost-output elasticity in production economics.
Verified Answer
KM
Kayla MontoyaJun 19, 2024
Final Answer :
A
Explanation :
The production function given does not exhibit increasing or decreasing returns to scale since it's not clearly defined or standard. However, in the context of constant returns to scale (a common assumption when not specified), doubling the output would require exactly doubling the inputs.
Learning Objectives
- Comprehend the principle of economies of scale and scope.
- Understand the role of scale economies and cost-output elasticity in production economics.
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