Figure 6.4.1
-Refer to Figure 6.4.1 above. According to the diagram below, where each isoquant's output level is marked to the right of the isoquant, production is characterized by:
A) decreasing returns to scale.
B) constant returns to scale.
C) increasing returns to scale.
D) increasing, constant and decreasing returns to scale.

Question

Figure 6.4.1
-Refer to Figure 6.4.1 above. According to the diagram below, where each isoquant's output level is marked to the right of the isoquant, production is characterized by:
A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) increasing, constant and decreasing returns to scale.

Quizplus · Accepted Answer

The isoquants are getting further apart from each other as we move from left to right, which means that an increase in inputs (labor and capital) results in a more than proportionate increase in output. This indicates increasing returns to scale.

Figure 6.4.1 -Refer to Figure 6.4.1 Above. According to the Diagram Below