Which of the following correctly explains increasing returns to scale?
A)With small scale operations,management inefficiencies are avoided.
B)Increasing the number of workers in a factory allows division and specialization of labor.
C)Firms that operate in small industries have higher input procurement costs.
D)Communication channels in large organizations tend to be complex.

Question

Quizplus · Accepted Answer

Increasing returns to scale occur when increasing inputs (such as labor) leads to a greater increase in output. This is often due to the ability to specialize and divide labor more effectively with a larger workforce.

Which of the Following Correctly Explains Increasing Returns to Scale