A firm with decreasing returns to scale can expect to produce [a. more than, b. less than, c.exactly] 20% more output if it uses 20% more inputs. its production to decrease by ["", "", ""] 10%, if it cuts all inputs to 90% of their previous levels.

A firm with decreasing returns to scale can expect to produce [a. more than, b. less than, c.exactly] 20% more output if it uses 20% more inputs. its production to decrease by ["", "", ""] 10%, if it cuts all inputs to 90% of their previous levels.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.8P

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Concept explainers

Factors of Production

Factors of production – in simple words means the factors that are used for producing any product or service. This includes the resources which are necessary for the manufacturing of products. Factors of production are also known as the building blocks of the economy.

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A firm with decreasing returns to scale can expect

to produce [a. more than, b. less than, c.exactly] 20% more output if it uses 20% more inputs.
its production to decrease by ["", "", ""] 10%, if it cuts all inputs to 90% of their previous levels.

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