JAMB - Economics (2012 - No. 18)
If a firm doubles all inputs in the long run and the total output is less than doubled, this results in
diminishing returns
constant returns to scale
increasing returns to scale
decreasing returns to scale
Explanation
A decreasing returns to scale occurs when the proportion of output is less than the desired increased input during the production process. For example, if input is increased by 3 times, but output is reduced 2 times, the firm or economy has experienced decreasing returns to scale.
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