An export industry is said to exhibit increasing returns to scale when

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Increasing returns to scale refer to a situation where a larger scale of production results in proportionally greater output. In an export industry, if a large-scale organization has significant competitive advantages over small-scale activities, i.e. increasing the scale of production results in greater efficiency and productivity, then it exhibits increasing returns to scale. Option A explains this concept. Option B describes decreasing returns to scale, while option C describes comparative advantage. Option D does not necessarily indicate increasing returns to scale, as a 10% increase in capital use may not result in proportionately greater output.

An Export Industry Is Said to Exhibit Increasing Returns to Scale