Below Are Some Cost Data Pertaining to Plant 1,which Has

Multiple Choice

Below are some cost data pertaining to Plant 1,which has total fixed costs of $1,000.Suppose that Plant 2 is exactly twice the size of Plant 1 while using (at economic capacity) twice the amount of labour and materials,and that it produces exactly twice the output.Further,assume that the prices of these inputs do not change.

-Refer to the information above to answer this question.What comment can be made in reference to returns to scale between Plants 1 and 2?

A) Constant returns to scale are present.
B) Increasing returns to scale are present.
C) Decreasing returns to scale are present.
D) Diminishing marginal returns are present.