Costs in the long run

Question 1

In the long run, all costs are:

Answer 1

Variable

Question 2

Returns to scale

Answer 2

The effect of output on long run average total costs

Question 3

Increasing returns to scale:

Answer 3

All inputs are increased by the same proportion and output increases by a larger proportion
Also known as economies of scale

Question 4

Constant returns to scale:

Answer 4

All inputs are increased by the same proportion and output increases by the same proportion

Question 5

Decreasing returns to scale:

Answer 5

All inputs are increased by the same proportion and output increases by a smaller proportion
Also known as diseconomies of scale