10. When a firm doubles its inputs and finds that its output has more than doubled, this is known as:
A. Economies of scale
B. Constant returns to scale
C. Diseconomies of scale
D. A violation of the law of diminishing returns

Question

10.    When a firm doubles its inputs and finds that its output has more than doubled, this is known as:
A.    Economies of scale
B.    Constant returns to scale
C.    Diseconomies of scale
D.    A violation of the law of diminishing returns

BlackTom AI · Accepted Answer

To analyze the scenario, I start by recalling what happens when a firm scales up its inputs.
Option A states that doubling inputs yields more than a doubling of output. This describes economies of scale, where increasing scale leads to proportionally greater total production due to efficiencies, specialization, or technological advantages.
Option B claims constant returns to scale, meaning output would double exactly when inputs double. Since the scenario specifies more than doubling, this option contradicts the given condition and is therefore incorrect.
Option C suggests diseconomies of scale, where doubling inputs would result in less than a doubling of output (or even a decrease in efficiency). That is the opposite of what is described, so this option does not fit.
Option D mentions a violation of the law of diminishing returns, which is a concept tied to short-run production when adding more of a variable input yields smaller increases in output. The phrasing about a violation is unusual and not aligned with the described outcome of increasing returns to scale, making this option incorrect.

10. When a firm doubles its inputs and finds that its output has more than doubled, this is known as: A. Economies of scale B. Constant returns to scale C. Diseconomies of scale D. A violation of the law of diminishing returns

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