A 10 percent increase in all inputs results in Burger King's output increasing by 9 percent. As a result, Burger King's cost per unit rises and the long-run average total cost curve is increasing.

Question

Quizplus · Accepted Answer

This scenario describes decreasing returns to scale, where a proportional increase in all inputs leads to a less than proportional increase in output, causing an increase in the average cost per unit as output increases.

A 10 Percent Increase in All Inputs Results in Burger