Question 11
[Maximum number: 1]
When a firm increases all its inputs fourfold, its output increases threefold.
What does this illustrate?
A
decreasing marginal costs
B
decreasing returns to scale
C
economies of scale
D
the law of diminishing returns
CAIE A-Level Economics 7.5.3 Long-run production function
Practise recognising long-run production choices where all inputs vary and output changes reveal returns to scale.
How this is tested
- compare proportional changes in all inputs and output to identify returns to scale