Assume a firm is using 10 units of labour and 10 units of capital and is producing 10 units of output per hour.Now both inputs are doubled,resulting in output rising to 18 units per hour.The firm is experiencing
A)decreasing returns to scale.
B)economies of scale.
C)increasing returns to scale.
D)constant returns to scale.
E)decreasing costs.

Question

Quizplus · Accepted Answer

When both inputs are doubled, the output increases by less than double (from 10 to 18 units), indicating decreasing returns to scale.

Assume a Firm Is Using 10 Units of Labour and 10