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Question
Which of the given options account for increasing returns to a factor?
Options
Fuller utilisation of fixed factors
Specialisation
Increased efficiency of variable factors
All these factors
MCQ
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Solution
All these factors
Explanation:
The phase where each extra unit of a variable input (such as labour) increases the overall output more than the one before it is commonly referred to as increasing returns to a factor. This occurs because of:
- Fuller utilisation of fixed factors
- Specialisation
- Increased efficiency of variable factors
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