Question: If a 10-percent increase in both capital and labour causes output to increase by less than 10 percent, the production function is said to exhibit

If a 10-percent increase in both capital and labour causes output to increase by less than 10 percent, the production function is said to exhibit decreasing returns to scale. If it causes out-put 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?

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