Figure 7.4.3
-Use the following two statements to answer this question: I. Increasing returns to scale cause economies of scale.
II) Economies of scale cause increasing returns to scale.
A) Both I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) Both I and II are false.

Question

Figure 7.4.3
-Use the following two statements to answer this question: I. Increasing returns to scale cause economies of scale.
II) Economies of scale cause increasing returns to scale.
A) Both I and II are true. 
B) I is true, and II is false. 
C) I is false, and II is true. 
D) Both I and II are false.

Quizplus · Accepted Answer

Increasing returns to scale refer to a situation where an increase in all inputs leads to a more than proportional increase in output, which can result in economies of scale. However, economies of scale, which are reductions in the average cost of production as the volume of production increases, do not necessarily cause increasing returns to scale; they are a potential outcome of it.

Figure 7.4.3 -Use the Following Two Statements to Answer This Question: I