If a firm increases all inputs by 5% and output increases by 2%, the firm would be experiencing increasing returns to scale.

Name: If a firm increases all inputs by 5% and output increases by 2%, the firm would be experiencing increasing returns to scale.
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Quizplus · Accepted Answer

Increasing returns to scale occur when output increases by a greater percentage than the increase in inputs. In this case, output increases by a smaller percentage than the inputs, indicating decreasing returns to scale.

If a Firm Increases All Inputs by 5% and Output