If output is produced with two factors of production and with increasing returns to scale,
A)there cannot be diminishing marginal rate of substitution.
B)all inputs must have increasing marginal products.
C)on a graph of production isoquants, moving along a ray from the origin, output more than doubles as the distance from the origin doubles.
D)the marginal product of at least one input must be increasing.
E)all inputs must have decreasing marginal products.

Question

Quizplus · Accepted Answer

With increasing returns to scale, doubling all inputs would more than double output, so output would increase more than proportionally. This is represented on a graph of production isoquants as a ray from the origin, where output more than doubles as the distance from the origin doubles.

If Output Is Produced with Two Factors of Production and with Increasing