If an increase in labour and capital of 10 per cent leads to output increasing by 20 per cent then,ceteris paribus,the economy is operating with:

Question

Quizplus · Accepted Answer

Increasing returns to scale occur when a proportionate increase in inputs leads to a more than proportionate increase in output. In this case, an increase in labour and capital of 10 per cent led to output increasing by 20 per cent, indicating that the economy is operating with increasing returns to scale.

If an Increase in Labour and Capital of 10 Per