Question: A firm uses capital and labour to produce a single output, and its production function displays increasing returns to scale at all levels of output.
(a) Does this imply that the average products of labour and capital are increasing?
(b) Does this imply that the marginal products of labour and capital are increasing?
(c) Does this imply that the short-run average cost curve is downward sloping?
(d) Does this imply that the long-run average cost curve is necessarily downward sloping?