Returns to scale refers to
A)what happens to output when at least one input is fixed and one is varied.
B)what happens to output when all inputs are held fixed.
C)what happens to output when all inputs are varied in some proportion.
D)the law of diminishing returns.

Question

Quizplus · Accepted Answer

Returns to scale describe the relationship between the proportionate increase in inputs and the proportionate increase in output. When all inputs are changed in the same proportion, returns to scale can be classified as constant returns to scale, increasing returns to scale, or decreasing returns to scale. Option A describes the law of variable proportions, option B describes total fixed inputs, and option D describes a specific phenomenon within the law of variable proportions.

Returns to Scale Refers to