Which of these conclusions can be reached regarding the firm's - ProProfs Discuss
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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.

This question is part of Chapter 7: Microeconomics
Asked by Twright on Mar 18, 2017

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2 Answers

L. Sevigny

L. Sevigny
Doctor, Las Vegas

Answered on Sep 11, 2018

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.

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John Smith

John Smith

Answered on Mar 18, 2017

D. The short-run marginal cost curve reveals nothing regarding returns to scale.
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