If input prices are constant in the long run, a firm with decreasing returns to scale can expect A. total costs to decrease when output doubles. B. total costs to double when output doubles. C. total costs to increase by less than double when output doubles. D. total costs to increase by more than double when output doubles.

Question

Asa Gilbert

Business

31 March, 16:27

If input prices are constant in the long run, a firm with decreasing returns to scale can expect A. total costs to decrease when output doubles. B. total costs to double when output doubles. C. total costs to increase by less than double when output doubles. D. total costs to increase by more than double when output doubles.

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Answers (1)

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Natalya Bowman · Answer 1

D) total costs to increase by more than double when output doubles.

Explanation:

Decreasing returns to scale refers to a situation where you can double your inputs but your total production output will be less than double. The output will increase in a smaller proportion than the inputs.

In this scenario, the more units you produce, the greater the cost per unit of production.