2. The XYZ Company, anticipating a downturn in its sales, closed one of its factories at the end of 2018. During 2019, usage of all inputs declined to a level of 75% of the previous year's level, while output fell to 80% of the previous year's level. Was the XYZ Company operating in the range of increasing returns to scale, decreasing returns to scale, or constant returns to scale? Explain.
2. The XYZ Company, anticipating a downturn in its sales, closed one of its factories at the end of 2018. During 2019, usage of all inputs declined to a level of 75% of the previous year's level, while output fell to 80% of the previous year's level. Was the XYZ Company operating in the range of increasing returns to scale, decreasing returns to scale, or constant returns to scale? Explain.
Chapter1: Making Economics Decisions
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![2. The XYZ Company, anticipating a downturn in its sales, closed one of its factories at the end of
2018. During 2019, usage of all inputs declined to a level of 75% of the previous year's level, while
output fell to 80% of the previous year's level.
Was the XYZ Company operating in the range of increasing returns to scale, decreasing
returns to scale, or constant returns to scale? Explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6fb3c5de-8c9b-4649-8745-7eb99127aa43%2F4d1ea322-7fb0-47e3-b14d-40083032af6a%2Fj4omka_processed.png&w=3840&q=75)
Transcribed Image Text:2. The XYZ Company, anticipating a downturn in its sales, closed one of its factories at the end of
2018. During 2019, usage of all inputs declined to a level of 75% of the previous year's level, while
output fell to 80% of the previous year's level.
Was the XYZ Company operating in the range of increasing returns to scale, decreasing
returns to scale, or constant returns to scale? Explain.
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