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

1870 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

How many diagrams do I have to draw in an answer, and how do I use them in my answer?


Why do firms in perfect competition earn normal profit in the long run


Explain the meaning of the law of demand; distinguish between movements along and shifts of the demand curve.


What are arguments in favour of protectionist policies?


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