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Author Question: Define returns to scale.[br][br][b][color=#A83E49]Question 2[/color][/b][br][br]A perfectly ... (Read 63 times)

lbcchick

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on: Jun 30, 2018
Define returns to scale.

Question 2

A perfectly competitive firm decides to shut down if:
 a. the price falls below the average-total-cost.
  b. average revenue falls below the average-variable-cost.
  c. the price falls below the marginal cost.
  d. the average revenue curve lies below the marginal cost curve.
  e. the total revenue is less than total cost.


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amanda_14

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Returns to scale summarize the response of a firm's output to equal percentage changes in all inputs. If all inputs are raised by equal percentages and output increases by a larger percentage, there are increasing returns to scale. Similarly, if all inputs are raised by equal percentages and output increases by a lesser percentage, there are decreasing returns to scale. If output changes by the same percentage as inputs, it implies constant returns to scale.

Answer to Question 2

b


lbcchick

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

kalskdjl1212

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Reply 3 on: Yesterday
Gracias!

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