If a farmer produces 1000 bushels of corn using ten acres of land and one tractor and is able to produce 2000 bushels of corn using twenty acres of land and one tractor,the farmer has
A) increasing returns to scale.
B) constant returns to scale.
C) decreasing returns to scale.
D) no returns to scale.

Question

Quizplus · Accepted Answer

Increasing returns to scale means that as the farmer uses more inputs (land and tractor), the output (bushels of corn) increases at an increasing rate. In this case, the farmer is able to produce twice as many bushels of corn (2000) using twice as much land (20 acres) and the same amount of tractor. This indicates that the farmer is experiencing increasing returns to scale.

If a Farmer Produces 1000 Bushels of Corn Using Ten