PRC-3 · Chapter 12 · Question 5 of 69
A factory exactly doubles all of its inputs—it buys twice as much land, builds twice as many machines, and hires twice as many workers. As a direct result, its total output strictly doubles. This scenario is a perfect example of:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Constant returns to scale
Explanation
Constant returns to scale occur in the long run when a proportionate increase in all input factors leads to exactly the same proportionate increase in total output.
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