If,as a result of doubling all its inputs,a firm can more than double its output,the firm's production function exhibits
A)constant returns to scale.
B)increasing returns to scale.
C)decreasing returns to scale.
D)increasing marginal productivity to at least one input.

Question

Quizplus · Accepted Answer

When a firm can more than double its output by doubling all its inputs, it exhibits increasing returns to scale. This means that the firm is able to take advantage of economies of scale, such as specialization, better use of resources, and lower transaction costs, among others. As a result, the firm can produce more efficiently and at a lower cost per unit, leading to higher overall output.

If,as a Result of Doubling All Its Inputs,a Firm Can