Give meaning of increasing returns to a factor.

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Solution

Increasing returns to a factor occur when TP increases at an increasing rate, i.e., MP rises.

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Similar questions

Explain the reasons for : (i) increasing returns to a factor and (ii) increasing returns to scale.

Q. Increasing returns to a factor are indicated whenever there is increase in total product.

Q. Diminishing returns to a factor occur simply because supply of all factors cannot be increased.

Returns to a factor refers to the resultant increase in the total product when only one factor is increased, keeping all the other factors constant.

Giving reasons, state whether the following statements are true or false:
(i) Average product will increase only when marginal product increases.
(ii) Under diminishing returns to a factor, total product continues to increase until marginal product reaches zero.

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