QUESTION 1Not yet answeredMarked out of 1.00A firm trebles its inputs and discovers that its output rises by a factor of four. Assuming constant factor prices, thisimplies:Select one or more:O a.constant returns to scaleO b. diminishing returns to a variable factorO c.economies of scaleO d. increasing returns to scaleQUESTION 2Not yet answeredMarked out of 1.00Diseconomies of scale are present when..Select one or more:O a.total costs fall as output risesO b. total costs rise as output risesO c. long run average costs rise as output risesO d. marginal costs rise QUESTION 5Not yet answeredMarked out of 1.00In a competitive market with free entry and exit from the market a permanent rise in demand will lead toSelect one or more:O a.excess profits being made in the short run (before new firms can enter)O b. entry by new firmsO c.a permanent rise in pricesO d. normal profits being made in the long-runQUESTION 6Not yet answeredMarked out of 1.00Imagine a firm in a competitive market comes up with a new production method, which halves its marginal cost atall levels of Q. Fixed costs are unaffected. Which of the following statements are true?O a.The firm's AC at all levels of Q would be lower.O b. The firm would extract an innovation rent from selling at the market price with lower costs.O c.The firm's point of minimum AC would be a higher level of Q.O d. The innovation would immediately cause the market price to drop.

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A firm trebles its inputs and discovers that its output rises by a factor of four. Assuming constant factor prices, this implies: Select one or more: O a. constant returns to scale O b. diminishing returns to a variable factor O c. economies of scale O d. increasing returns to scale

A firm trebles its inputs and discovers that its output rises by a factor of four. Assuming constant factor prices, this implies: Select one or more: O a. constant returns to scale O b. diminishing returns to a variable factor O c. economies of scale O d. increasing returns to scale

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.7P

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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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