Which of these conclusions can be reached regarding the firm's returns to scale? A firm's short-run marginal cost curve is U-shaped.
A. The firm experiences increasing returns to scale. B. The firm experiences increasing, constant, and decreasing returns in that order. C. The firm experiences first decreasing, then increasing returns to scale. D. The short-run marginal cost curve reveals nothing regarding returns to scale.
The term "return to scale" relates to how well a business or company is producing. It tries to pinpoint increased production in relation to factors that contribute over a period of time. Most production functions include both labor and capital as factors.
By using the multiplier and simple algebra, you can figure out economic sales questions. Returns to scale only consider production efficiency while economies of scale explicitly consider cost. Returns to scales describes the relationship between inputs and outputs in a long run production function. Returns to scale is when the scale of production increases in the long run.