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Question 37 A firm that doubles its inputs and sees its output triple is experiencing ______....

Question 37

A firm that doubles its inputs and sees its output triple is experiencing ______.

A increasing returns to scale

B constant returns to scale

C decreasing returns to scale

Business   Economics   
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Answer #1

The correct answer is 'Option A'.

When the inputs are increased by a proportion 'm' then the output also increases by the same proportion then there are constant returns to scale. When the output changed less proportionately then there are decreasing returns to scale and when the output increases more proportionately then there are increasing returns to scale. It is given that the output triples when the inputs are doubled. So, the firm is experiencing increasing returns to scale. Therefore, the correct answer is 'Option A'.

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