A production function exhibits increasing returns to scale if:
A) when you double one input, you double the output
B) when you double each input, you double the output
C) when you double each input, you less than double the output
D) when you double each input, you more than double the output
E) when you hold inputs constant, you double the output

Question

Quizplus · Accepted Answer

Increasing returns to scale refer to the situation where a proportional increase in all inputs results in a greater proportional increase in output. If doubling each input results in more than a doubling of output, this indicates that the production function exhibits increasing returns to scale.

A Production Function Exhibits Increasing Returns to Scale If