Question:
Increasing returns to scale reflect a technological characteristic under which the percentage increase in a firm’s output
(1) exceeds the percentage increase in its inputs.
(2) is less than the percentage increase in its inputs.
(3) is equal to the percentage increase in its inputs.
(4) exceeds the percentage increase in its fixed inputs.
(5) is less than the percentage increase in its fixed inputs.
Correct Answer:
(1)
Answer Explanation:
Returns to scale describe the long-run relationship between inputs and output. “Increasing returns to scale” occur when an increase in all factor inputs causes a proportionately greater increase in total output (e.g., doubling all inputs triples the output).
Topic: Production Year: 2020
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