If production displays constant returns to scale, then all economies of scale have been exhausted.

Question

Quizplus · Accepted Answer

Constant returns to scale mean that if all inputs are increased proportionally, the output will increase proportionally as well. This indicates that there are no further economies of scale to be gained, as any increase in inputs will lead to a constant increase in output, rather than an increasing rate of output as in economies of scale.

If Production Displays Constant Returns to Scale, Then All Economies