FIGURE 8- 2

-Refer to Figure 8- 2.Increasing returns to scale occur over the output range
A)beyond Q3 only.
B)Q1 to Q2 only.
C)0 to Q3 only.
D)Q2 to Q3 only.
E)0 to Q1 only.

Question

FIGURE 8- 2 
 
-Refer to Figure 8- 2.Increasing returns to scale occur over the output range
A)beyond Q3 only. 
B)Q1 to Q2 only. 
C)0 to Q3 only. 
D)Q2 to Q3 only. 
E)0 to Q1 only.

Quizplus · Accepted Answer

The graph shows increasing returns to scale from output 0 to Q3 only, as the slope of the curve is increasing over this range. Beyond Q3 the curve flattens out and there are constant returns to scale. Therefore, choices A, B, D, and E are incorrect.