A production function exhibits decreasing returns to scale if:
A) when you double each input, you double the output
B) when you double each input, you more than double the output
C) when you double each input, you less than double the output
D) when you double one input, you double the output
E) when you hold inputs constant, you double the output

Question

Quizplus · Accepted Answer

Decreasing returns to scale imply that when inputs are augmented by a certain factor, the output increases by less than that factor. Therefore, when you double each input, you less than double the output.

A Production Function Exhibits Decreasing Returns to Scale If