Practicing Success
Practicing Success
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| Consider a production process with the production function q = f (x1, x2). If all inputs get doubled, and law of diminishing returns to scale is operative, then the output will be |
Doubled Less than doubled More than doubled Tripled |
| Less than doubled |
| In this question, diminishing returns to scale means decreasing returns to scale. Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion. So, if all inputs get doubled, and law of diminishing returns to scale is operative, then the output will be less than doubled. |
