Question

a firm increases the amount of inputs it uses in its production process by 200%. the firm experiences increasing returns to scale if its output increases by ________.more than 200%less than 200%200%question 41 ptsin a production process, all inputs are increased by 10%; but output increases less than 10%. this means that the firm experiencesnegative returns to scale.increasing returns to scale.constant returns to scale.decreasing returns to scale.

Explanation:

• For the first question: Increasing returns to scale occur when output increases by a greater proportion than inputs. Here, inputs increase by 200%, so output must increase by more than 200%.
• For the second question: Decreasing returns to scale happen when output increases by a smaller proportion than inputs. Since inputs increase by 10% and output increases less than 10%, it is decreasing returns to scale.

Answer:

• First question: more than 200%
• Second question: decreasing returns to scale