Explain the Different Types of Returns to Scale
Constant returns to scale prevail ie by doubling all inputs we get twice as much output. When increasing returns to scale occurs it results in economies of scale. Law Of Returns To Scale Definition Explanation And Its Types This relationship is shown by the first expression above. . 5 Major Differences between Returns to Scale and Returns to a factor Proportions are listed below. Increasing returns to scale constant returns to scale and diminishing or decreasing returns to scale. When the change in output is more than in proportion to the equi-proportional change in. If ab. Q 5 Km Lm 5KLm 2 Q m 2. Constant Returns to Scale. When all inputs are increased by a certain percentage the output increases by the same percentage the production function is said to exhibit constant returns to scale. Returns to scale are long-run measurements. When all inputs are increased by a given proportion and the output increase...