Returns to Scale
Definition
How output changes when all inputs are scaled proportionally. Increasing, constant, or decreasing.
Example
Doubling labor and capital might more than double output (IRS), exactly double (CRS), or less than double (DRS).
How output changes when all inputs are scaled proportionally. Increasing, constant, or decreasing.
Doubling labor and capital might more than double output (IRS), exactly double (CRS), or less than double (DRS).