Question

5. Increasing returns to scale can be explained in terms of:

a) External and internal economies
b) External and internal diseconomies
c) External economics and internal diseconomies
d) All of these.​

Answer 1

option D is the ans for this question

Answer 2

Option a is the correct answer.

Increasing returns to scale can be explained in terms of external and internal economies.

1. Increasing returns to scale is when output produced is relatively in large proportion than the inputs used.
2. Economies of scale refer to cost benefits that are derived from efficiency in production.
3. External economies is economies of scale achieved by external changes in the industry that reduce the cost.
4. Internal economies is economies of scale achieved by internal management of an enterprise or firm.
5. Both external and internal economies help in achieving increasing returns to scale.