Option 1 -> When scaling input x₂ by factor t yields output greater than t times original output, indicating increasing returns.
Option 2 -> Would require f(x₁, tx₂) = tf(x₁, x₂), showing proportional relationship.
Option 3 -> Would require f(x₁, tx₂) < tf(x₁, x₂), showing diminishing returns.
Option 4 -> Too general; doesn't specify the type of returns.
Hence, Increasing returns to scale -> The condition f(x₁, tx₂) > tf(x₁, x₂) shows that when input x₂ is scaled by factor t (while x₁ remains constant), output increases by MORE than t times. This superproportional increase in output relative to the input increase is characteristic of increasing returns to scale, indicating that the production technology becomes more productive as scale increases. This suggests economies of scale where doubling inputs leads to more than doubling of output. -> correct