When an increase in inputs leads to a more than proportionate increase in output, there is

The situation where an increase in inputs leads to a more than proportionate increase in output is called increasing returns to scale. In other words, if we increase the amount of inputs used in production by a certain percentage, then the output will increase by more than that percentage. For example, if a factory doubles its workforce and, as a result, its production output more than doubles, then this is an example of increasing returns to scale. The opposite of increasing returns to scale is decreasing returns to scale, which occurs when a proportional increase in inputs leads to a less than proportional increase in output. If the increase in inputs results in a proportional increase in output, then this is constant returns to scale.