Asksia AI LOGO

Sia

Question
Microeconomics
Posted about 2 months ago

What is a firm experiencing if it doubles all its inputs and this results in a tripling of output?

Choose 1 answer:
(A) Decreasing returns to scale
(B) Constant returns to scale
(C) Diseconomies of scale
(D) increasing returns to scale
(E) Minimum efficient scale
Sign in to unlock the answer
Answer from Sia
Posted about 2 months ago
Solution
a
Definition of Returns to Scale: Returns to scale refer to the changes in output resulting from a proportional change in all inputs
b
Increasing Returns to Scale: If a firm doubles all its inputs and the output more than doubles (in this case, triples), it is experiencing increasing returns to scale
Answer
(D) Increasing returns to scale
Key Concept
Increasing Returns to Scale
Explanation
When a firm doubles its inputs and the output triples, it indicates that the firm is experiencing increasing returns to scale. This means that the output increases by a greater proportion than the increase in inputs.

Not the question you are looking for? Ask here!

Enter question by text

Enter question by image

Upgrade to Asksia Pro

Join a AskSia's Pro Plan, and get 24/7 AI tutoring for your reviews, assignments, quizzes and exam preps.

Unlimited chat query usages
Strong algorithms that better know you
Early access to new release features
Study Other Question