1. Define the concept of returns to scale. What is the difference between increasing, decreasing and...

Question

Question

1. Define the concept of returns to scale. What is the difference between increasing, decreasing and constant returns to scal

Answer 1

Answer #1

A.Returns to scale is the variation, or change, in productivity or output from a proportionate increase in the quantity of all the input.

Increasing to scale is when change in output is more than change in input.

Decreasing returns is when change in output is less than change in input.

Constant returns is when change in input is equal to change in output.

B. Increasing Returis Constant Returns Output Y Decreasing Returns Input X

Answer 2

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