Question : When all inputs are doubled and a result, output also doubles, then we have:
Option 1: constant returns to scale
Option 2: decreasing returns to scale
Option 3: increasing returns to scale
Option 4: none of the options
Correct Answer: constant returns to scale
Solution : The correct answer is constant returns to scale .
Constant returns to scale occur in Economics when all inputs (such as labour, capital and materials) are doubled as a result, the output also increases by the same factor. This implies that a proportional increase in inputs leads to an equal proportional increase in output. In such a scenario, a firm or production process constantly returns to scale.
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