-The above figure shows the isoquants for producing steel.When producing less than 10,000 tons there are
A) increasing returns to scale.
B) decreasing returns to scale.
C) constant returns to scale.
D) diseconomies of scale.

Question

-The above figure shows the isoquants for producing steel.When producing less than 10,000 tons there are
A) increasing returns to scale. 
B) decreasing returns to scale. 
C) constant returns to scale. 
D) diseconomies of scale.

Quizplus · Accepted Answer

Increasing returns to scale occur when an increase in inputs leads to a more than proportional increase in output, which is typically observed when producing less than a certain quantity, such as 10,000 tons in this scenario.

-The Above Figure Shows the Isoquants for Producing Steel