How would you explain, in your own words, the concept of "Decreasing Returns to Scale"?

This is a phenomenon that occurs when input (labour, raw materials or capital) is added to a production process and yields a less than proportional increase in outputAs an example, we could look at a company producing bottles. If the owner increases the input of labour (hires more workers) or materials (buys more plastic to produce bottles) by 50% ; but the production of bottles only increases by 20%, we can talk about the Decreasing Returns to Scale.

LA
Answered by Laura A. Economics tutor

1698 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Explain, with the help of diagrams, the effect of an increase in the price of petrol is likely to have on (i) The market for cars. (ii) The market for coal.


Evaluate the advantages of perfectly competitive and monopolistic markets in the long run.


How can I achieve a top grade?


What does it take to make a 7 in HL Economics?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences