Option 1 -> Occurs when output increases by a smaller proportion than inputs.
Option 2 -> Occurs when output increases by a larger proportion than inputs.
Option 3 -> Occurs when output increases by the same proportion as inputs.
Option 4 -> Refers to declining additional output from one variable input while others are fixed.
Hence, Increasing return to scale -> This is a long-run production concept where when all inputs are increased by a certain proportion, output increases by a larger proportion. For example, if a firm doubles all its inputs (labor, capital, materials) and output more than doubles (say, triples), the firm experiences increasing returns to scale. This often occurs due to specialization, efficient use of indivisible inputs, and economies of scale. -> correct