Question:
Economists classify production funtions as possessing constanct, decreasing, or increasing returns to scale. Yet, from a cause and effect point of view, it is not readily apparent why decreasing returns to scale should ever exist. That is, if we duplicate an activity we ought to get duplicate results. Hence, if we truly duplicate all of the inputs, we ought to get double the output. Can you reconcile the apparent contradiction between this logic and the expectation of the economist that beyond certain output ranges firms will confront decreasing returns to scale?