-The above figure shows the isoquants for producing steel.When producing more than 20,000 tons there are
A) increasing returns to scale.
B) decreasing returns to scale.
C) constant returns to scale.
D) economies of scale.

Question

-The above figure shows the isoquants for producing steel.When producing more than 20,000 tons there are
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) economies of scale.

Quizplus · Accepted Answer

Decreasing returns to scale occur when increasing the input of resources results in a less than proportional increase in output, which is indicated by the isoquants becoming closer together as production increases beyond 20,000 tons. This means that to produce each additional unit of output, more and more inputs are required, reflecting decreasing efficiency or decreasing returns to scale.

-The Above Figure Shows the Isoquants for Producing Steel