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Returns to scale |
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Returns to scaleSame as increasing returns to scale.Similar MatchesDecreasing returns to scaleDecreasing returns to scaleA property of a production function such that changing all inputs by the same proportion changes output less than in proportion. Example: a function homogeneous of degree less than one. Also called simply decreasing returns. Not to be confused with diminishing returns, which refers to increasing some inputs while holding other inputs fixed. Contrasts with increasing returns and constant returns. External increasing returns to scaleExternal increasing returns to scaleExternal economies of scale. Law of Diminishing ReturnsLaw of Diminishing ReturnsThe principle that, in any production function, as the input of one factor rises holding other factors fixed, the marginal product of that factor must eventually decline. Constant returns to scaleConstant returns to scaleA property of a production function such that scaling all inputs by any positive constant also scales output by the same constant. Such a function is also called homogeneous of degree one or linearly homogeneous. CRTS is a critical assumption of the H-O Model of international trade. Contrasts with increasing returns and decreasing returns. Increasing returns to scaleIncreasing returns to scaleA property of a production function such that changing all inputs by the same proportion changes output more than in proportion. Common forms include homogeneous of degree greater than one and production with constant marginal cost but positive fixed cost. Also called economies of scale, scale economies, and simply increasing returns. Contrasts with decreasing returns and constant returns. Further SuggestionsIncreasing And Diminishing ReturnsDiminishing returns Separate tax returns |
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