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

2143 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Explain why the marginal cost curve intersects the average cost curve at its minimum point?


How does an Expansionary Fiscal Policy affect the Real GDP of an Economy?


Explain the impact that a rise in the world price of oil might have on aggregate supply and gross domestic product (GDP) in an economy


Define the term monopoly and outline its characteristics.


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