A software company doubles its workforce of programmers and also doubles the number of high-performance computers they use. As a result, the company's output of coded software modules increases from 500 modules per month to 1,200 modules per month. Based on this information, which of the following best describes the company's production situation?

Analyzing Production Scenarios

A manufacturing firm observes that after hiring more workers while keeping its factory size the same, each additional worker adds less to the total output than the previous one. This situation is a clear example of decreasing returns to scale.

Analyzing a Bakery's Expansion Strategy

A firm is analyzing how its total output changes when it proportionally increases all of its inputs (like labor and capital) over a long period. Match each potential outcome for the firm's output with the correct economic term that describes it.

Long-Run vs. Short-Run Production Decisions

Calculating Economic Rent from a Job Offer

A firm's production process is described by the function Q = L^0.7 * K^0.5, where Q is the total output, L is the amount of labor, and K is the amount of capital. If the firm decides to increase both its labor and capital inputs by 10%, what will be the resulting percentage change in its total output?

Explaining Increasing Returns to Scale

A manufacturing company is planning its long-term growth. An internal study reveals that a 50% proportional increase in all of its inputs (labor, capital, and raw materials) leads to a 30% increase in total output. Based on this finding, what is the most likely effect on the company's long-run average cost per unit as it expands its scale of production?