Which is a common reason for increasing returns to scale?

Difficulty in managing a very large firmCorrect answerYour answerA fall in the price of outputCorrect answerYour answerA fixed amount of capitalCorrect answerYour answerGreater division of labour and specialisation in a larger firmCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

A bigger firm can split work into specialised tasks and use larger, more efficient machines.
Management difficulties are a reason for decreasing returns to scale.

Concept: Sources of increasing returns
Typical timeTypical: 70 s
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The rule this testsReturns to scale

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Which is a common reason for increasing returns to scale?

Explanation