Decreasing returns to scale may occur because:
A)there are unlimited wants in any society
B)natural resources are limited
C)management easily co-ordinates operations to ensure efficient production
D)inventions of new technology are on the rise
E)there are limited wants in any society

Question

Quizplus · Accepted Answer

Decreasing returns to scale occur when an increase in inputs results in a proportionately smaller increase in output. This is often due to limited natural resources or a lack of technology to efficiently utilize the available resources. Unlimited wants, efficient management, and inventions of new technology are not necessarily causes of decreasing returns to scale. Limited wants would instead cause a lack of demand, leading to reduced production.

Decreasing Returns to Scale May Occur Because