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If a company doubles all its inputs and discovers that its output is more than...

Economics
JAMB 1978

If a company doubles all its inputs and discovers that its output is more than doubles, we can say that the company is experiencing

  • A. Increasing Marginal utility
  • B. Diseconomies of scale
  • C. Increasing costs
  • D. Constant returns to scale
  • E. Increasing returns to scale
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Correct Answer: Option E
Explanation

A company is said to be experiencing increasing returns to scale when the output increases by a larger proportion than the increase in inputs during the production process.

For example, if the input is increased by 3 times, but output increases by 3.75 times, then the firm or economy has experienced an increasing returns to scale.


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JAMB CBT Software 2024 - Free Download
JAMB CBT Mobile App 2024 - Free Download
JAMB CBT 2024 - Candidates, Schools, Centres, Resellers - Get Ready!
WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
JAMB CBT Mobile App 2024 - Free Download
WAEC May/June 2024 - Practice for Objective & Theory - From 1988 till date, download app now - 99995
JAMB CBT 2024 - Candidates, Schools, Centres, Resellers - Get Ready!
JAMB CBT Software 2024 - Free Download