Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars.This is an example of
A) constant returns to scale.
B) increasing returns to scale.
C) decreasing returns to scale.
D) the law of diminishing returns.
E) diminishing marginal rate of substitution.

Question

Quizplus · Accepted Answer

Constant returns to scale occur when increasing the inputs by a certain factor results in an increase in outputs by the same factor. In this case, tripling production facilities leads to tripling production, indicating constant returns to scale.

Suppose Ford Could Triple Production of Mustangs by Tripling Its