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

1910 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

What is the law of demand?


Explain how a reduction in income tax could affect both aggregate demand and aggregate supply in an economy


What are automatic stabilisers?


What is the Monopoly Market Structure?


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