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.
Sources
- Constant returns to scale - Economics Help - economicshelp.org
- Constant Returns to Scale - Intelligent Economist - intelligenteconomist.com
- Constant Returns to Scale | Use, Benefits & Examples - Study.com - study.com
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