Question

explain the meaning of increasing returns to scale. what are its causes​

Answer 1

Answer:

Increasing returns to scale or diminishing cost refers to a situation when all factors of production are increased, output increases at a higher rate. It means if all inputs are doubled, output will also increase at the faster rate than double.

Hence, it is said to be increasing returns to scale.

CAUSES-

1. Some factors of production should be divisible or variable.

2. Arrangement of fixed as well as variable factors can be made more effective

3. At least one factor of production is divisible.

Answer 2

When an increase in inputs (capital and labour) cause the same proportional increase in output. Constant returns to scale occur when increasing the number of inputs leads to an equivalent increase in the output..

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