If we increase all of our inputs on the farm and we get a decrease in output, this is an example of which of the following:
A)Increasing returns to scale.
B)Constant returns to scale.
C)Decreasing returns to scale.
D)Normal returns to scale.
E)none of the above.

Question

Quizplus · Accepted Answer

This scenario represents decreasing returns to scale, as increasing all inputs should ideally result in a proportional increase in output or at least a constant output level, but here we are observing a decrease in output.

If We Increase All of Our Inputs on the Farm