It is possible to have decreasing marginal products for all inputs, and yet have increasing returns to scale.

Question

Quizplus · Accepted Answer

Increasing returns to scale refer to the situation where increasing all inputs by the same percentage results in a more than proportionate increase in output. This can occur even if the marginal product of each input decreases as more of it is used, as long as the overall increase in output is sufficiently greater than the increase in inputs.

It Is Possible to Have Decreasing Marginal Products for All