Suppose a shipping company employs 2000 workers,operates 400 delivery trucks and makes 1.5 million domestic shipments in one year.The next year they increase their workforce to 3000 workers,operate 600 trucks and make 2.8 million domestic shipments in one year.This firm is exhibiting ________ returns to scale.
A)decreasing
B)increasing
C)constant
D)marginal
E)variable

Question

Quizplus · Accepted Answer

The company is exhibiting increasing returns to scale since their increase in inputs (workers, trucks, and shipments) has resulted in a greater than proportionate increase in output (shipments).

Suppose a Shipping Company Employs 2000 Workers,operates 400 Delivery Trucks