Option 1: Constant return to scale -> Output increases proportionately equal to input increase.
Option 2: Decreasing return to scale -> Output increases less than proportionate to input increase.
Option 3: Marginal rate of substitution -> Refers to consumer preferences, not production output-input relationship.
Option 4: Increasing return to scale -> Output increases more than proportionate to input increase.
Hence, Increasing return to scale -> This occurs when a proportionate increase in all inputs leads to a more than proportionate increase in output. For example, if all inputs are doubled, output more than doubles. This is common in industries with high fixed costs or those benefiting from specialization and economies of scale. -> correct