Diminishing or decreasing returns to scale where the increase in output is more than proportionate increase in quantities of factor inputs it is called diminishing returns to scale.

Here, IQ₁, IQ₂ and IQ₃ represent the total output of 1000 units, 2000 units and 3000 units respectively.

As we can see EE₁ < E₁E₂ < E₂E₃, so it is decreasing returns to scale.