Use the following to answer questions :
Figure 6-1
-Suppose that two inputs, K and L, are variable and increase at the same rate.Which one of the panels in Figure 6-1 represents Increasing Return to Scale (IRS)?
A)Panel a.
B)Panel b.
C)Panel c.
D)Panel d.
E)None of the above.

Question

Use the following to answer questions :
Figure 6-1 
-Suppose that two inputs, K and L, are variable and increase at the same rate.Which one of the panels in Figure 6-1 represents Increasing Return to Scale (IRS)?
A)Panel a. 
B)Panel b. 
C)Panel c. 
D)Panel d. 
E)None of the above.

Quizplus · Accepted Answer

Panel c in Figure 6-1 represents Increasing Return to Scale (IRS). In this panel, both inputs K and L increase at the same rate, and as a result, the output increases at a faster rate, indicating increasing returns to scale. Panels a, b, and d represent constant returns to scale, decreasing returns to scale, and negative returns to scale, respectively.

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