The increasing marginal returns due to specialization is demonstrated between points A to C.
Increasing marginal returns is known to take place when there is an addition of a variable input. The variable input is added to a fixed input in order to enable the variable input to be more productive.
Increasing marginal returns refers to the fact that the marginal product of the variable input increases.
In order words, the productivity of four workers in a firm is more compared to that of two workers and the productivity of six workers is more than that of four workers.
