If all inputs are increased by 5 percent and output increases by ...

[mckennatimberlake]

If all inputs are increased by 5 percent and output increases by 8 percent, then the
 
  A) firm experiences constant returns to scale.
  B) long-run average cost curve slopes downward.
  C) long-run average cost curve shifts downward.
  D) firm experiences diseconomies of scale.

Question 2

Consider a market in which there is an external benefit. A private subsidy paid to producers can be used to arrive at the efficient market equilibrium because the subsidy will
 
  A) increase the quantity produced.
  B) decrease the supply of the good.
  C) increase the price demanders pay.
  D) decrease demand.

[SeanoH09]

Answer to Question 1

B

Answer to Question 2

A