Question

With a view to increase his production Hari Haran a manufacturer of shoes, increases all the factors of production in his unit by 100%. But at the end of year he finds that instead of an increase of 100%, his production has increased by only 80%. Which law of returns to scale is operating in this case______
a)Increasing returns to scale
b)Decreasing returns to scale
c)Constant returns to scale
d)None of the above

Answer 1

B) decreasing returns to scale