Question

4. The rate of output for a product was 1,000 units per month. The

Answer 1

Answer:

Explanation:

Company increases the input by 20%

increase in output in percentage terms

= [(1500 - 1000) / 1000 ] x 100

= 50 %

So percentage increase in output is more than percentage increase in input

hence there is increasing return to scale at this product.

In case of increasing return to scale , cost of production per unit  decreases .

There is increasing efficiency in production .