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Production Function: TP, MP and AP · Question 53 of 62

Question 53

MediumOriginal question

A firm doubles all its inputs and its output rises from 100 to 170 units. It has

Options for question 53

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. Doubling inputs would give 200 under constant returns; 170 is less than double.

  2. Output rising by a smaller proportion than inputs is decreasing returns to scale.

Worth noting

'Diminishing returns to a factor' needs one input fixed; here every input was doubled.

Concept
Decreasing returns to scale
Typical time
70 s
Your time
—
The rule this testsReturns to scale
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