In a production process is it possible to have decreasing marginal product in an input and yet increasing returns to scale?

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2026-03-12 16:20

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Yes, it is possible to have decreasing marginal product for an input while still experiencing increasing returns to scale. Decreasing marginal product occurs when adding more of a particular input results in smaller increases in output. However, increasing returns to scale implies that when all inputs are increased proportionally, the output increases by a greater proportion. This can happen if the production process benefits from efficiencies or synergies that arise from scaling up production, despite the diminishing returns on individual inputs.

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