What Does the Term "Decreasing Returns to Scale" Mean

question 34

Multiple Choice

What does the term "decreasing returns to scale" mean?

• A)The situation where a doubling of inputs results in output increasing by less than double.
• B)The situation where a firm's output decreases in proportion to the decrease in its inputs.
• C)It means that the firm is operating on the falling portion of its long run average cost curve.
• D)It means that the firm is operating on the horizontal portion of its long run average cost curve.

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Definitions:

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