The curves shown in the diagram indicate the various combinations of capital and labour required by a firm to produce specified levels of output. What can be inferred from comparing the curves in the diagram?
- AOver the 100 to 200 units output range, the firm encounters constant returns to scale.
- BOver the 100 to 200 units output range, the firm encounters decreasing returns to scale.
- COver the 200 to 300 units output range, the firm encounters decreasing returns to scale.
- DOver the entire range of output, the firm encounters increasing returns to scale.