Suppose Ford could triple production of Mustangs by tripling its production facilities for those cars. This is an example of
A) constant returns to scale.
B) increasing returns to scale.
C) decreasing returns to scale.
D) the law of diminishing returns.
E) diminishing marginal rate of substitution.

Question

Quizplus · Accepted Answer

This is an example of constant returns to scale because tripling the inputs (production facilities) results in a tripling of output (Mustangs), indicating a proportional increase in output relative to inputs.

Suppose Ford Could Triple Production of Mustangs by Tripling Its