What is meant by the term "increasing returns to scale"?
A)output rises proportionately less than inputs,increasing per unit cost of production in the short run
B)output rises proportionately more than inputs,resulting in increasing per unit costs
C)output rises proportionately more than inputs,resulting in lower per unit costs in the long run
D)it has the same meaning as increasing costs of production
E)it implies that the long-run average cost curve is shifting downward

Question

Quizplus · Accepted Answer

Increasing returns to scale occur when a proportional increase in all inputs results in a greater increase in output, leading to lower per unit costs in the long run. This means that as production increases, economies of scale kick in, resulting in lower average costs.

What Is Meant by the Term "Increasing Returns to Scale