Micro 4.5

What are costs influenced by in the long run?

Increasing or decreasing returns to scale.

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What do returns to scale refer to?

The relationship between increases in the quantity of a firm’s inputs and the proportional change in output.

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What are 3 examples of returns to scale?

Increasing returns to scale, constant returns to scale and decreasing returns to scale.

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When do increasing returns to scale happen?

When an increase in the quantity of a firm’s inputs leads to a proportionally greater change in output.

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When do constant returns to scale happen?

When an increase in the quantity of a firm’s inputs leads to a proportionally identical change in output.

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When do decreasing returns to scale happen?

When an increase in the quantity of a firm’s inputs leads to a proportionally lower change in output.

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Other cards in this set

What do returns to scale refer to?

The relationship between increases in the quantity of a firm’s inputs and the proportional change in output.

What are 3 examples of returns to scale?

When do increasing returns to scale happen?

When do constant returns to scale happen?

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