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

Analyze the question: It describes what happens when ALL inputs are increased by some proportion and output rises by a larger proportion. This is a long-run concept, so it is about returns to scale.

Explain the concept: Returns to scale describe how output responds when all factors of production are increased together:

• Increasing returns to scale: output rises by a larger proportion than the inputs.
• Constant returns to scale: output rises by the same proportion as the inputs.
• Decreasing returns to scale: output rises by a smaller proportion than the inputs.

Solution:

Take an example. If a firm doubles all its inputs (×2) and its output more than doubles (say ×2.5 or ×3), then output has increased by a more than proportionate amount. This matches increasing returns to scale.

Checking each option:

• A. Decreasing returns to scale: output rises less than proportionately. This is wrong.
• B. Increase in marginal product: this is a short-run idea about the extra output from one more unit of a single variable input. It does not describe all inputs changing proportionately. This is wrong.
• C. Increasing returns to scale: output rises more than proportionately. This is correct. (The option is spelled "retums" in the question, but it clearly means "returns".)
• D. Constant returns to scale: output rises exactly proportionately. This is wrong.

Exam tip: Compare the percentage change in output with the percentage change in inputs:

• Output % > input % → Increasing returns
• Output % = input % → Constant returns
• Output % < input % → Decreasing returns

Also remember that "returns to scale" is the long run (all inputs vary), while "law of diminishing returns" and "marginal product" are the short run (at least one input is fixed).