Question

What is returns to scale? What is the difference between law of variable proportions and returns to scale? for 4 marks.
Is returns to scale included in our syllabus?

Answer 1

Explanation:

Comment Differences between law of variable portions and returns to scale Basis of difference Law of variable proportions Law of returns to scale Time period Applies in the short run Applies in the long run Variable and fixed factors Only variable factors are changed and units of fixed factors remain the same All ...

Answer 2

Answer:

Returns Of scale describe what happens to long run return the scale of production increase.

Explanation:

law of variable proposition:Only variable factors are changed &fixed factors remains the same

there are 3 stages:1 increasing returns

2 diminishing returns

3 Negative returns

time period: applies in the short run

return of scale :all the factors increaseing simultaneosly

there are 3 stages:1 increasing return

2 constant return

3 decreasing return

Time period:applies in the long run