**Question:**If a production function exhibits constant returns to scale, average cost will increase as output expands.- ○ True- ○ False**Explanation:**In economic theory, if a production function has constant returns to scale, it means that increasing all inputs by a certain percentage results in an increase in output by the same percentage. This implies that the average cost remains constant as output expands, rather than increasing. Therefore, the correct answer is "False."

Production function, in financial matters, condition that communicates the connection between the…

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a production function exhibits constant returns to scale, average cost will increase as output expands.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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