Why a situation of increasing returns to a factor not sustainable? Giv

1.	Why a situation of increasing returns to a factor not sustainable? Give two reasons.
Answer» A situation of increasing returns to a factor is not sustainable owing to the following reasons: (i) some factors are fixed in supply. So that their use cannot be increased proportionate to the variable factors. (ii) factors of production are not perfect substitutes of each other.

Why a situation of increasing returns to a factor not sustainable? Give two reasons.

Answer»

A situation of increasing returns to a factor is not sustainable owing to the following reasons:

(i) some factors are fixed in supply. So that their use cannot be increased proportionate to the variable factors.

(ii) factors of production are not perfect substitutes of each other.