--%>

What is Constant Returns to scale

What is Constant Returns to scale?

E

Expert

Verified

Firms cannot keep increasing returns to scale indefinitely after the first stage; therefore, firm enters a stage while total output tends to increase at a rate that is equal to the rate of increase in inputs. Such stage comes in to operation while the economies of large scale production are neutralized through the diseconomies of huge scale operation.

   Related Questions in Managerial Economics

  • Q : What are the certain assumptions in

    What are the certain assumptions in production functions?

  • Q : Theory of wage differentials according

    Adam Smith’s theory of wage differentials is least consistent along with a case wherein a: (i) chef in a five-star restaurant earns a higher wage than a cook into a fast food restaurant. (ii) security guard for a U.S. firm into Baghdad is paid m

  • Q : Opportunity cost of good Since an

    Since an economy moves downward all along the production possibility frontier which is concave from beneath, the: (1) Opportunity cost of the good whose production goes increasing. (2) Law of rising returns outcomes ever lower costs. (3) Dollar value

  • Q : Surplus payment from society to

    If a resource is in perfectly inelastic supply (like land), the resource price: (w) has no allocative function. (x) would rise only when resource demand falls. (y) is a surplus payment from society as an entire to resource owners. (z)

  • Q : Most valuable human capital The most

    The most valuable human capital onto the given list would be possessed through a person who: (w) inherited a great deal of money. (x) invested large sums on the stock market. (y) had an advanced degree in music education. (z) specialized like a medica

  • Q : Explain the concept of revenue Explain

    Explain the concept of revenue.

  • Q : Marginal Factor or Resource Costs The

    The words “marginal factor costs” or “marginal resource costs” taken as to the: (w) extra cost involved in producing an additional resource. (x) extra cost involved while producing an additional unit of a resou

  • Q : Wage Rates and Employment An increase

    An increase in the competitively-set wage tends to cause: (w) firms to reduce the amounts of labor hired. (x) increases in the marginal revenue products of the workers a firm retains. (y) higher marginal factor costs of labor to competitive firms. (z)

  • Q : States the term Production States the

    States the term Production?

  • Q : Determine loss in curve of profit or

    As is given figure below. Assume that the prevailing price is P1 and the firm is now producing its loss-minimizing quantity. Determine the area which shows the loss: w) P2deP1. x) P3cbP1. y) P3caP0