A.B. Denson Company had been employing 6 workers and 8 tons of raw materials, using 2,000 square feet of plant space. The firm increased its work force to 12 workers utilizing 16 tons of raw materials in a plant space increased to 4,000 square feet. Total number of units of output increased from 78 to 160 . What kind of returns to scale is the firm experiencing? Defend your answer
Increasing returns to scale. All inputs were doubled and output more than doubled (160/78 = 2.05).
You might also like to view...
If aggregate hours are 100 billion hours and labor productivity is $40 an hour, than real GDP equals
A) $100 billion. B) $40 billion. C) $100 trillion. D) $2.5 trillion. E) $4 trillion.
A tax on a good that is imposed by the importing country is called a
A) tariff. B) nontariff barrier. C) quantitative restriction. D) licensing regulation. E) trade constraint.
If supply is perfectly inelastic and demand increases,
a. price falls and output rises. b. price rises and output falls. c. price rises and output remains unchanged. d. price rises and output rises.
A progressive tax means the percentage of income paid as taxes:
a. increases as income increases. b. decreases as income increases. c. remains the same as income increases. d. none of these.