Explanation:

- Constant Returns to Scale: Output increases by the same proportion as inputs. If inputs double, output also doubles.

- Decreasing Returns to Scale: Output increases by a smaller proportion than the increase in inputs. If inputs double, output less than doubles.

- Increasing Returns to Scale: Output increases by a larger proportion than the increase in inputs. If inputs double, output more than doubles.

- Infinite Returns to Scale: Typically theoretical and not possible in real-world scenarios.

To determine the returns to scale:

- Initial input combination: 20 capital, 150 labor = 3000 units

- New input combination: 40 capital, 300 labor = 4500 units

The inputs were doubled (both capital and labor), but output increased from 3000 to 4500 – a 1.5 times increase, not double.

Correct Answer: Option 2 - Decreasing Returns to Scale.