{"id":55861,"date":"2024-04-16T00:34:40","date_gmt":"2024-04-16T00:34:40","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=55861"},"modified":"2024-04-16T00:34:40","modified_gmt":"2024-04-16T00:34:40","slug":"consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina\/","title":{"rendered":"Consider the following statements- 1. The increasing returns to scale imply that the marginal product of a variable factor will always increase. 2. The constant returns to scale imply that the marginal product of a variable factor will always diminish 3. Managerial diseconomies constitute an important cause of decreasing returns to scale Which of these statements is\/are correct?"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;1, 2 and 3&#8243; option2=&#8221;1 and 3&#8243; option3=&#8221;2 only&#8221; option4=&#8221;2 and 3&#8243; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is: <strong>C. 2 only<\/strong><\/p>\n<p>Statement 1 is incorrect. Increasing returns to scale imply that the marginal product of a variable factor will <strong>eventually<\/strong> increase, but not always. For example, if a firm doubles all of its inputs, it may initially experience increasing returns to scale as the firm becomes more efficient. However, as the firm continues to grow, it may eventually reach a point where it becomes more difficult to manage and coordinate the production process, leading to decreasing returns to scale.<\/p>\n<p>Statement 2 is correct. Constant returns to scale imply that the marginal product of a variable factor will <strong>always<\/strong> remain constant. This means that if a firm doubles all of its inputs, it will also double its output.<\/p>\n<p>Statement 3 is correct. Managerial diseconomies are one of the main causes of decreasing returns to scale. As a firm grows, it becomes more difficult to manage and coordinate the production process. This can lead to inefficiencies and a decrease in output.<\/p>\n<p>Therefore, the only statement that is correct is statement 2.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;1, 2 and 3&#8243; option2=&#8221;1 and 3&#8243; option3=&#8221;2 only&#8221; option4=&#8221;2 and 3&#8243; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-55861","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Consider the following statements- 1. The increasing returns to scale imply that the marginal product of a variable factor will always increase. 2. The constant returns to scale imply that the marginal product of a variable factor will always diminish 3. Managerial diseconomies constitute an important cause of decreasing returns to scale Which of these statements is\/are correct?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Consider the following statements- 1. The increasing returns to scale imply that the marginal product of a variable factor will always increase. 2. 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Managerial diseconomies constitute an important cause of decreasing returns to scale Which of these statements is\/are correct?\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;1, 2 and 3&#8243; option2=&#8221;1 and 3&#8243; option3=&#8221;2 only&#8221; option4=&#8221;2 and 3&#8243; correct=&#8221;option3&#8243;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-16T00:34:40+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Consider the following statements- 1. The increasing returns to scale imply that the marginal product of a variable factor will always increase. 2. The constant returns to scale imply that the marginal product of a variable factor will always diminish 3. Managerial diseconomies constitute an important cause of decreasing returns to scale Which of these statements is\/are correct?","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina\/","og_locale":"en_US","og_type":"article","og_title":"Consider the following statements- 1. The increasing returns to scale imply that the marginal product of a variable factor will always increase. 2. The constant returns to scale imply that the marginal product of a variable factor will always diminish 3. Managerial diseconomies constitute an important cause of decreasing returns to scale Which of these statements is\/are correct?","og_description":"[amp_mcq option1=&#8221;1, 2 and 3&#8243; option2=&#8221;1 and 3&#8243; option3=&#8221;2 only&#8221; option4=&#8221;2 and 3&#8243; correct=&#8221;option3&#8243;]","og_url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2024-04-16T00:34:40+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina\/","url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-1-the-increasing-returns-to-scale-imply-that-the-marginal-product-of-a-variable-factor-will-always-increase-2-the-constant-returns-to-scale-imply-that-the-margina\/","name":"Consider the following statements- 1. 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