If a firm had everywhere increasing returns to scale, what would happen to its profits if prices remained fixed and if it doubled its scale of operation
If a firm had everywhere increasing returns to scale, its profits would increase if prices remained fixed and it doubled its scale of operation. This is because increasing returns to scale means that the firm's average costs decrease as it increases its scale of operation. Therefore, if the firm doubles its scale of operation and prices remain fixed, its profits will increase due to the decrease in average costs.
