Question:

Which of the following statements describes increasing returns to scale:

A.

Doubling the inputs used leads to double the output.

B.

Increasing the inputs by 50% leads to a 25% increase in output.

C.

Increasing inputs by 1/4 leads to an increase in output of 1/3.

D.

None of the above.

Answer» c. Increasing inputs by 1/4 leads to an increase in output of 1/3.