National Income and Related Aggregates-Types of Goods (CBSE (Central Board of Secondary Education- Board Exam) Class-12 Economics): Questions 10 - 10 of 10

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Question number: 10

» National Income and Related Aggregates » Types of Goods

Essay Question▾

Describe in Detail

Explain, with the help of numerical examples, the effect on total output of a good when all the inputs used in production of that good are increase simultaneously and in the same proportion.


The behavior of Total Product (TP) is technically Returns to Scale. There are three possibilities:

(1) TP rises in greater proportion than the rise in inputs it is known as Increasing Returns to Scale. For example: Suppose there are only two inputs labor (L) and Capital (K). Suppose 1K + IL produce 100 units and 2K + 2L produce 250 units. Input

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