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

Question

Quizplus · Accepted Answer

Tripling the production facilities to triple the output of Mustangs indicates that the output increases in direct proportion to the increase in inputs, which is the definition of constant returns to scale.

Suppose Ford Could Triple Production of Mustangs by Tripling Its