Microeconomics: Production and Costs · Class 11 · CBSE · Commerce Economics
A firm doubles all its inputs and its output rises from 100 units to 240 units. This situation represents:
Practice question from Microeconomics: Production and Costs (Class 11 · CBSE · Commerce Economics), with the correct answer and a step-by-step solution.
easy · MCQ · Q-846410
A firm doubles all its inputs and its output rises from 100 units to 240 units. This situation represents:
- A.Constant returns to scale
- B.Increasing returns to scaleCorrect answer
- C.Decreasing returns to scale
- D.Negative returns to scale
Solution
When all inputs are doubled, constant returns would result in 200 units of output. Since output rises to 240 units, it increases by more than the proportionate increase in inputs; therefore, the firm experiences increasing returns to scale.
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