What does increasing returns to scale in production mean?
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A. more than 10% as much of all inputs are required to increase output 10%.
B. less than twice as much of all inputs are required to double output.
C. more than twice as much of only one input is required to double output.
D. isoquants must be linear.
E. Both a and d.
The term “returns to scale” pertains to the actions taken to increase the productivity of a product being sold in accordance with increase in the product being made. There are three law related to the laws of returns to scale. They are the Law of Increasing Returns to Scale, Law of Diminishing returns to Scale and the Law of Constant Returns to Scale.
When more products are sold at an increasing rate compared to the amount of changed to manufacturing the product, this is called increasing returns to scale. These examples fall under the category of microeconomics. When increasing returns to scale in production are less than twice as much of all inputs, this will cause a double output which means twice as many will be produced.
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