Introduction to Economics 1 Deneme Sınavı Sorusu #754081

If the output increases by the same percentage as the increase in all inputs, what is this situation called?


Increasing returns to scale

Constant returns to scale

Decreasing returns to scale

Economies of scale

Diseconomies of scale


Yanıt Açıklaması:

Constant returns to scale is an increase in output by the same percentage as an increase in all inputs. On the other hand, if the output increases more than the percentage increase in inputs, we call this ‘increasing returns to scale’ or ‘economies of scale’. In addition, if the output increases less than the percentage increase in inputs, then there are ‘decreasing returns to scale’ or ‘diseconomies of scale’. The correct answer is B

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