A firm faces competitive markets both for its inputs and its outputs. If its long-run supply curve is q = 3p,then it cannot have constant returns to scale.

Question

Quizplus · Accepted Answer

If the firm's long-run supply curve is q=3p, this implies that as the price of the output (p) increases, the quantity supplied (q) will increase by a factor of 3. This indicates increasing returns to scale, not constant returns to scale. Therefore, the statement is false, and the correct answer is A.

A Firm Faces Competitive Markets Both for Its Inputs and Its