Answer :

When the total output increases in a larger proportion than the proportionate increase in the factor input, it is called increasing returns to scale.

increasing.jpg


Here, IQ1, IQ2 and IQ3 represent the total output of 1000 units, 2000 units and 3000 units respectively.


As we can see EE1 > E1E2 > E2E3, so it is increasing returns to scale.


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