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

1914 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Evaluate the impact of a price ceiling


Under what conditions can a firm sell the same product at different prices?


If a country wishes to depreciate their own currency, how could they do so in terms of monetary policy? List three possible effects depreciating their currency will have on the economy.


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.


We're here to help

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

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning