The figure below shows the isocost lines and the isoquant map for a firm producing golf tees. FIGURE 8-6
-Refer to Figure 8-6. As this firm is increasing its production of golf tees, it is experiencingreturns to scale.
A) not determinable from the information provided
B) constant
C) decreasing
D) diminishing
E) increasing

Question

The figure below shows the isocost lines and the isoquant map for a firm producing golf tees.  FIGURE 8-6
-Refer to Figure 8-6. As this firm is increasing its production of golf tees, it is experiencingreturns to scale.
A) not determinable from the information provided 
B) constant 
C) decreasing 
D) diminishing 
E) increasing

Quizplus · Accepted Answer

As the firm is increasing its production of golf tees and experiencing increasing returns to scale, it means that the output is increasing at a faster rate than the inputs.

The Figure Below Shows the Isocost Lines and the Isoquant