If a firm's output doubles when all inputs are doubled, production is said to occur under conditions of
A) increasing returns to scale.
B) imperfect competition.
C) intra-industry equilibrium.
D) constant returns to scale
E) decreasing returns to scale.

Question

Quizplus · Accepted Answer

Constant returns to scale means that if all inputs are increased by a certain percentage, the output increases by the same percentage. In this case, the output doubles when all inputs are doubled, indicating constant returns to scale. If the output had increased by more than double, it would be increasing returns to scale; if it had increased less than double, it would be decreasing returns to scale.

If a Firm's Output Doubles When All Inputs Are Doubled