GCEEconomicsProduction and Costs2022

A firm operates in the long run with labour and capital as inputs. If it doubles both inputs and output exactly doubles, the firm is experiencing:

AIncreasing returns to scale
BDecreasing returns to scale
CConstant returns to scaleCORRECT
DDiminishing marginal returns
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Why the answer is C, and why the others tempt you.
When a proportional increase in all inputs leads to the same proportional increase in output, the firm experiences constant returns to scale. Increasing returns to scale occur when output more than doubles, and decreasing returns when output less than doubles. Diminishing marginal returns is a short-run concept, not a long-run scale concept.
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