If a McDonald's franchise increases all resources used in the production process by 25 percent and output increases by less than 25 percent, the franchise realizes
A) constant returns to scale
B) increasing marginal productivity
C) economies of scale
D) diseconomies of scale

Question

Quizplus · Accepted Answer

This scenario describes diseconomies of scale, where increasing all inputs by a certain percentage results in a less than proportional increase in output, indicating a decrease in efficiency as the scale of production increases.

If a McDonald's Franchise Increases All Resources Used in the Production