Decreasing returns to scale occur when a business:
A)increases output by the same percentage as it increases all inputs for a certain product
B)increases inputs by a given percentage to increase output by a higher percentage
C)decreases inputs to produce a higher percentage increase in output
D)increases inputs in order to produce a smaller percentage increase in output
E)decreases both inputs and output simultaneously

Question

Quizplus · Accepted Answer

Decreasing returns to scale occur when a business increases inputs in order to produce a smaller percentage increase in output. This means that as the business grows in size, its efficiency decreases and costs increase at a faster rate than production.

Decreasing Returns to Scale Occur When a Business