Increasing returns to scale holds when a proportional increase in all inputs results in an increase in output by ________ that proportion.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → more than
Under increasing returns to scale, output rises by a larger proportion than the inputs: double the inputs, more than double the output.
NCERT (2026-27), Introductory Microeconomics, Glossary: “Increasing returns to scale is a property of production function that holds when a proportional increase in all inputs results in an increase in output by more than the proportion.” |