Question

Examine the laws of return to scale ♡​

Answer 1

Laws Of Returns

In the long run all factors of production are variable.

No factor is fixed. Accordingly, the scale of

production can be changed by changing the quantity

of all factors of production.

Definition:

“The term returns to scale refers to the changes in

output as all factors change by the same proportion.”

Koutsoyiannis

“Returns to scale relates to the behaviour of total

output as all inputs are varied and is a long run

concept”. Leibhafsky

Returns to scale are of the following three types:

1. Increasing Returns to scale.

2. Constant Returns to Scale

3. Diminishing Returns to Scale

Explanation:

In the long run, output can be increased by

increasing all factors in the same proportion.

Generally, laws of returns to scale refer to an increase in output due to increase in all factors in the

same proportion. Such an increase is called returns

to scale.

Suppose, initially production function is as

follows:

P = f (L, K)

Now, if both the factors of production i.e., labour

and capital are increased in same proportion i.e., x,

product function will be rewritten as.

Answer 2

$\Large\textbf{I hope this helps you!}$

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• Changes in output when all factors change in the same proportion are referred to as the law of return to scale. This law applies only in the long run when no factor is fixed, and all factors are increased in the same proportion to boost production.

$\Large\textbf{I hope this helps you!}$

Explanation:

“ᴡɪsʜɪɴɢ ʏᴏᴜ ᴀɴᴅ ʏᴏᴜʀ ғᴀᴍɪʟʏ ɢᴏᴏᴅ ʜᴇᴀʟᴛʜ, ʜᴀᴘᴘɪɴᴇss, sᴜᴄᴄᴇss ᴀɴᴅ ᴘʀᴏsᴘᴇʀɪᴛʏ ɪɴ ᴛʜᴇ ᴄᴏᴍɪɴɢ ʏᴇᴀʀ! ʜᴀᴠᴇ ᴀ ɢʀᴇᴀᴛ sᴛᴀʀᴛ ᴛᴏ ᴀ ɢʀᴇᴀᴛ ʏᴇᴀʀ!”

*ʜᴀᴘᴘʏ ɴᴇᴡ ʏᴇᴀʀ*