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Suppose That a Firm Increases Inputs by 10% and Observes

Question 7

Multiple Choice

Suppose that a firm increases inputs by 10% and observes a 13% increase in output.If the prices of its inputs remain constant,then


A) constant returns to scale are present.
B) average cost decreases.
C) total cost decreases.
D) average cost is unchanged.
E) average cost could be higher or lower.

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