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Define constant returns to scale.

Understand the Problem

The question is asking for the definition of the economic concept of constant returns to scale, which refers to a situation in production where increasing the quantity of inputs results in a proportional increase in the quantity of output.

Answer

Constant returns to scale occur when the increase in inputs results in a proportional increase in outputs.

Constant returns to scale occur when the increase in inputs results in a proportional increase in outputs.

Answer for screen readers

Constant returns to scale occur when the increase in inputs results in a proportional increase in outputs.

More Information

Constant returns to scale imply that efficiency remains unchanged as the scale of production increases. It often indicates optimal use of resources.

Tips

A common mistake is confusing constant returns to scale with increasing or decreasing returns to scale, where outputs change at a different rate than inputs.

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