Returns to scale:
- A long-run concept
- It shows the proportion of change in output in relation to the proportion of change in input. (What you get out compared with what you put in).
- The long run curve is made up of lots of short-run curves.
There are different types of return to scale:
- Increasing returns to scale
- Constant returns to scale
- Decreasing returns to scale
They are ALL increasing, but by different amounts.
For example: a 10% increase in input…
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