The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3

-If a firm has constant returns to scale, then doubling all of its inputs will just double its output.

Question

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
 
-If a firm has constant returns to scale, then doubling all of its inputs will just double its output.

Quizplus · Accepted Answer

Constant returns to scale means that if all inputs are increased by the same proportion, output will increase by that same proportion. Therefore, if all inputs are doubled, output will also be doubled, indicating that the firm has constant returns to scale.

The Figure Given Below Shows Three Short Run Average Total