Assume labour is the only factor of production in a competitive product market.If there are increasing returns to scale then:

Question

Quizplus · Accepted Answer

When there are increasing returns to scale, a firm can increase its output more than proportionately by increasing its inputs. This means that as more labour is employed, the marginal product of labour increases, resulting in increasing returns to scale. Therefore, the correct choice is (C) marginal product of labour is increasing.

Assume Labour Is the Only Factor of Production in a Competitive