Returns to Scale

Returns to Scale

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Description

Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. In economics, returns to scale and economies of scale are related terms that describe what happens as the scale of production increases in the long run, when all input levels including physical capital usage are variable (chosen by the firm). They are different terms and should not be used interchangeably. The term returns to scale arises in the context of a firm's production function. It refers to changes in output resulting from a proportional change in all inputs (where all inputs increase by a constant factor). If output increases by that same proportional change then there are constant returns to scale (CRS). If output increases by less than that proportional change, there are decreasing returns to scale (DRS). If output increases by more than that proportional change, there are increasing returns to scale (IRS). Thus the returns to scale faced by a firm are purely technologically imposed and are not influenced by economic decisions or by market conditions.show more

Product details

  • Paperback | 112 pages
  • 152 x 229 x 7mm | 177g
  • Serv
  • United States
  • English
  • black & white illustrations
  • 6136254336
  • 9786136254333