A possible reason for the existence of increasing returns to scale is
A) the inability of a firm to increase all inputs proportionately.
B) the problems of coordination and control.
C) higher input prices.
D) larger fixed costs with a larger plant size.
E) greater specialization.

Question

Quizplus · Accepted Answer

Greater specialization can lead to increased efficiency and productivity, which can result in increasing returns to scale. As the scale of production increases, firms can take advantage of division of labor and specialized skills to maximize output while minimizing costs.

A Possible Reason for the Existence of Increasing Returns to Scale