Which scenario reflects Increasing Returns in the context of production?

The scenario that reflects Increasing Returns in the context of production is one where consistently using more labor leads to higher net income. Increasing Returns occur when the addition of input (in this case, labor) results in a proportionately larger increase in output or, in a broader sense, productivity. This means that as more workers are added, they can work together collaboratively, often leading to efficiencies and benefits of division of labor, which amplify productivity and subsequently increase net income.

In this situation, the implication is that the additional labor is not only producing more output but is also doing so in a way that is efficient enough to improve overall profitability. This is critical in economic terms because it emphasizes how scaling up production—whether by increasing labor or other factors—can lead to better financial outcomes for the business.

In contrast, the other scenarios do not reflect Increasing Returns as effectively. Reducing expenditures on land could lead to cost savings but does not inherently ensure increased returns on production or income. Limiting the number of agents in production often constrains output, which is contrary to the concept of increasing returns. Finally, making only minor improvements to existing structures would typically yield diminishing returns, as the impact of such changes may not significantly enhance productivity.