4.1.4.5 Long-Run Costs and Returns to Scale VIDEO

What defines the long-run in terms of production factors?

• All factors are variable

• All factors are fixed

• Only labor and capital are variable

• Only capital is variable

What does the long-run average cost curve represent?

• Fixed costs over time

• Variable costs over time

• Total costs over multiple short runs

• Returns to scale over time

What does the shape of the long-run average cost curve indicate about a business's production stages?

• It shows the impact of external economic factors

• It reflects the business's market share

• It indicates fixed production costs

• It shows various stages of returns to scale

What occurs during increasing returns to scale?

• Output increases more than input

• Input increases more than output

• Output and input increase equally

• No change in output or input

What happens during constant returns to scale?

• Input increases more than output

• There is no change in input or output

• Input and output increase at the same rate

• Output increases more than input

How is the percentage change in inputs calculated?

• Old input divided by new input

• New input minus old input

• (New input - Old input) / Old input * 100

• New input / Old input * 100

What does decreasing returns to scale imply about cost and output?

• Costs decrease as output increases

• Output increases but at a slower rate than costs

• Output decreases as costs increase

• Costs and output increase at the same rate

In the context of returns to scale, what does an increase in inputs without a proportionate increase in outputs indicate?

• No returns to scale

• Increasing returns to scale

• Constant returns to scale

• Decreasing returns to scale

What does a numerical example of returns to scale demonstrate?

• Fixed cost calculations

• Variable cost calculations

• The impact of market forces on production

• How input changes affect output

How are economies of scale related to returns to scale?

• They are unrelated

• Economies of scale lead to decreasing returns

• Diseconomies of scale lead to increasing returns

• Economies of scale lead to increasing returns