Suppose, inputs input prices do not change. If a given firm decides to double all its inputs, as a result, the firm's level of production also doubles. This firm: has constant returns to scale and is operating on the constant portion of its long-run average total cost curve. O has decreasing returns to scale and is operating on the upward-sloping portion of its long-run average total cost curve. has increasing returns to scale and is operating on the downward-sloping portion of its long-run average total cost curve O has decreasing returns to scale and is operating on the downward-sloping portion of its long-run average total cost curve.
Suppose, inputs input prices do not change. If a given firm decides to double all its inputs, as a result, the firm's level of production also doubles. This firm: has constant returns to scale and is operating on the constant portion of its long-run average total cost curve. O has decreasing returns to scale and is operating on the upward-sloping portion of its long-run average total cost curve. has increasing returns to scale and is operating on the downward-sloping portion of its long-run average total cost curve O has decreasing returns to scale and is operating on the downward-sloping portion of its long-run average total cost curve.
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.3P
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Transcribed Image Text:Suppose, inputs input prices do not change. If a given firm decides to double all its inputs, as a result, the firm's level of production
also doubles. This firm:
has constant returns to scale and is operating on the constant portion of its long-run average total cost curve.
O has decreasing returns to scale and is operating on the upward-sloping portion of its long-run average total cost curve.
O has increasing returns to scale and is operating on the downward-sloping portion of its long-run average total cost curve.
O has decreasing returns to scale and is operating on the downward-sloping portion of its long-run average total cost curve.
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