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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


Team Careers360 12th Jan, 2024
Answer (1)
Team Careers360 17th Jan, 2024

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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