Question

Which of the following is not a reason for operation of increasing returns to a factor?
a. Better utilisation of fixed factor

b. Limitation of fixed factor

c. Increase in efficiency of variable factor

d. Indivisibility of fixed factor​

Answer 1

Answer:

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Explanation:

Solution : ... Limitation of fixed factor is not a reason for operation of increasing returns to a factor.

Answer 2

Limitation of fixed factor is not a reason for operation of increasing returns to a factor.

Definition of Returns to a factor

Returns to a factor describes the behaviour of physical output when a variable factor's physical input changes while fixed factors stay constant.

Returns to a factor are divided into three categories

• Increasing a Factor's Returns.
• Constant Returns to a Factor.
• Diminishing Returns to a Factor.

Some of the reasons why a factor's returns are increasing

• The fixed factor is fully used.
• Improved inter-factor cooperation.
• Increased efficiency of variable components and division of labour.

Hence, there are many reasons like fixed factors being fully used etc. which contribute to operation of increasing returns to a factor.