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.
[tex]\Large\textbf{I hope this helps you!}[/tex]
[tex]{\color{lightgreen}{\underline{\rule{100pt}{2pt}}}}{\color{magenta}{\underline{\rule{100pt}{2pt}}}}[/tex]
“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*
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Verified answer
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.
[tex]\Large\textbf{I hope this helps you!}[/tex]
[tex]{\color{lightgreen}{\underline{\rule{100pt}{2pt}}}}{\color{magenta}{\underline{\rule{100pt}{2pt}}}}[/tex]
[tex]\Large\textbf{I hope this helps you!}[/tex]
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*