When a country's population is experiencing increasing returns, that country is said to be?

Analyze the question: The question is about the theory of population. It asks what condition a country is in when its population is experiencing increasing returns, meaning that more people lead to a more-than-proportionate rise in output per head.

Concept: The key idea is the optimum population, the population size at which output per head is highest.

• Under-population: the population is below the optimum. Resources are not fully used. Adding more people raises output per head, so there are increasing returns to labour.
• Optimum population: output per head is at its maximum, so returns are constant.
• Over-population: the population is above the optimum. Adding more people reduces output per head, so there are diminishing returns.

Solution:

1. Increasing returns means that more workers raise output per head.
2. That happens only when the population is still below the optimum level.
3. A population below the optimum is under-populated.

Checking the options:

• A. Overpopulated: this goes with diminishing returns, so it is wrong.
• B. Economically poor: poverty is not what defines increasing returns, so it is wrong.
• C. Over-producing goods and services: this has nothing to do with population size relative to resources, so it is wrong.
• D. Under-populated: this matches the explanation above, so it is correct.

Exam tip: Link the words to the stage.

• Increasing returns → under-population (room to grow)
• Diminishing returns → over-population (too crowded)

Picture a U-shaped curve of output per head. The rising part is under-population, the peak is the optimum, and the falling part is over-population.