If the isoquants in an isoquant map are downward sloping but bowed away from the origin (i.e., concave to the origin), then the production technology violates the assumption of:
A) technical efficiency.
B) free disposal.
C) diminishing marginal returns.
D) positive average product.

Question

Quizplus · Accepted Answer

If the isoquants are concave (bowed) towards the origin, then the production technology exhibits increasing marginal returns to scale, which violates the assumption of diminishing marginal returns. This means that as more and more inputs are used, output increases at an increasing rate, rather than at a decreasing rate as we would expect with diminishing marginal returns.

If the Isoquants in an Isoquant Map Are Downward Sloping