If a firm doubles its usage of all inputs and output less than doubles,the production function
Is said to exhibit:
A)increasing returns to scale.
B)decreasing returns to scale.
C)constant returns to scale.
D)decreasing marginal returns to a fixed factor of production.

Question

Quizplus · Accepted Answer

When a firm increases its usage of all inputs by double, it is called "doubling of inputs." If the output does not double with the doubling of inputs, the production function is said to exhibit decreasing returns to scale. This means that the increase in input usage is not leading to a proportionate increase in output, and the marginal product of each additional unit of input is decreasing.

If a Firm Doubles Its Usage of All Inputs and Output