Assume a firm is using 10 units of capital and 10 units of labour and is producing 10 widgets per hour. Now it doubles both inputs, resulting in output of 30 widgets per hour. This firm is experiencing
A) constant returns.
B) increasing returns.
C) decreasing returns.
D) diseconomies of scale.
E) increasing costs.

Question

Quizplus · Accepted Answer

The fact that output tripled when inputs doubled indicates increasing returns to scale.

Assume a Firm Is Using 10 Units of Capital and 10