Answer to Question #167299 in Economics for Juan Frayre

Question

Tim owns a water pump. Because pumping large amounts of water is harder than pumping small amounts, the cost of producing a bottle of water rises as he pumps more. Here is the cost he incurs to produce each bottle of water:

Answer 1

If pumping large amounts of water is harder than pumping small amounts, and the cost of producing a bottle of water rises as he pumps more, then Tim exibits increasing returns to scale.