FIGURE 8- 2
-Refer to Figure 8- 2. Increasing returns to scale occur over the output range
A) Q2 to Q3 only.
B) beyond Q3 only.
C) 0 to Q1 only.
D) Q1 to Q2 only.
E) 0 to Q3 only.

Question

FIGURE 8- 2
-Refer to Figure 8- 2. Increasing returns to scale occur over the output range
A) Q2 to Q3 only. 
B) beyond Q3 only. 
C) 0 to Q1 only. 
D) Q1 to Q2 only. 
E) 0 to Q3 only.

Quizplus · Accepted Answer

Increasing returns to scale occur over the entire output range from 0 to Q3. This means that as the level of output increases within this range, the firm experiences greater efficiency and lower costs per unit produced. Beyond Q3, the firm would experience decreasing returns to scale, meaning that as output continues to increase, the firm would experience diminishing efficiency and increasing costs per unit produced.

FIGURE 8- 2 -Refer to Figure 8- 2. Increasing Returns to Scale Occur