Question

In which situation do “Increasing Returns to Scale” occur?

Options

• Doubling inputs results in less than double output

• Doubling one input while others are fixed increases output

• Doubling all inputs results in more than double output

• No change in inputs increases output

Answer 1

Doubling all inputs results in more than double output

Explanation:

“Increasing Returns to Scale” means output grows faster than the increase in all inputs, showing higher efficiency when inputs are increased together.