1 year ago
Microeconomics

Returns to scale – Rate at which output increases as inputs are increased proportionately.

Increasing returns to scale – Situation in which output more than doubles when all inputs are doubled. (on a graph isoquants get closer and closer as you move to the right)

Constant returns to scale – Situation in which output doubles when all inputs are doubled.

Decreasing returns to scale – Situation in which output less than doubles when all inputs are doubled. (on a graph isoquants get further and further apart when you move to the right)

 

Bijay Satyal
Dec 1, 2021
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