Capital and labor causes output to increase

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If a 10 percent increase in both capital and labor causes output to increase by less than 10 percent, the production function is said to exhibit decreasing returns to scale. If it causes output to increase by more than 10 percent, the production function is said to exhibit increasing returns to scale. Why might a production function exhibit decreasing or increasing returns to scale? Mankiw, N. Gregory (2015-05-22).

Reference no: EM13999235

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