-The above figure shows the isoquants for producing steel.Decreasing returns to scale are
A) present when producing more than 10,000 tons.
B) present when producing more than 20,000 tons.
C) present when producing more than 30,000 tons.
D) never present.

Question

-The above figure shows the isoquants for producing steel.Decreasing returns to scale are
A) present when producing more than 10,000 tons. 
B) present when producing more than 20,000 tons. 
C) present when producing more than 30,000 tons. 
D) never present.

Quizplus · Accepted Answer

Decreasing returns to scale occur when increasing the input amounts leads to a less than proportional increase in output. In the context of isoquants, this is indicated when the isoquants become closer together as output increases, suggesting that more and more inputs are needed to produce additional units of output. If the statement indicates that decreasing returns to scale are present beyond a certain production level (e.g., 20,000 tons), it means that beyond this point, the efficiency of production decreases, requiring disproportionately more inputs to increase output.

-The Above Figure Shows the Isoquants for Producing Steel