If a firm doubles its usage of all inputs,and output more 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)increasing marginal returns to a fixed factor of production.

Question

Quizplus · Accepted Answer

When a firm doubles its usage of all inputs and output more than doubles, it indicates that the production function is exhibiting increasing returns to scale. In other words, when a firm increases all inputs, the output increases at a greater rate, which leads to economies of scale. This can be due to various reasons such as specialization, division of labor, efficient use of resources, and so on. Hence, option A is the correct answer. Options B, C, and D are not appropriate in this case since they do not reflect the scenario where the firm doubles its inputs and output more than doubles.

If a Firm Doubles Its Usage of All Inputs,and Output