Increasing Returns

Increasing returns has a meaning that seems different from what one would interpret from its name. The actual meaning of increasing returns is economic law that governs modern knowledge based businesses according to softwaretimes.com. One would think that when you double the input of a business the output would be doubled as well. This is not true according to the law of increasing returns. The law of increasing returns makes the doubling disproportioned.

           For instance Coca Cola has a certain amount of workers for their warehouses. They are always testing the amount of workers to see how it affects the productivity. By doubling the amount of workers you would think that it would double productivity. This isn’t accurate because there are different factors that cause change. One example would be that work wouldn’t be evenly distributed which would cause workers to become idle.