Economics · Microeconomics
Given below are two statements: one is labeled as Assertion (A) and the other is labeled as Reason (R). Assertion (A): In the long run, when all factors of production are increased in the same proportion and output increases in a greater proportion, the firm experiences increasing returns to scale. Reason (R): Increasing returns to scale occur due to internal economies such as managerial specialization and technical efficiencies. Select the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both A and R are true and R is the correct explanation of A✓
- 2Both A and R are true but R is not the correct explanation of A
- 3A is true but R is false
- 4A is false but R is true
Correct answer
Both A and R are true and R is the correct explanation of A
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