{"id":3787,"date":"2020-03-04T05:33:18","date_gmt":"2020-03-04T05:33:18","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3787"},"modified":"2020-03-04T05:33:18","modified_gmt":"2020-03-04T05:33:18","slug":"returns-to-scale","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/returns-to-scale\/","title":{"rendered":"RETURNS TO SCALE"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_71 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/returns-to-scale\/#LAW_OF_RETURNS_TO_SCALE\" title=\"LAW\nOF RETURNS TO SCALE\">LAW\nOF RETURNS TO SCALE<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/returns-to-scale\/#ASSUMPTIONS_OF_LAW_OF_RETURNS_TO_SCALE\" title=\"ASSUMPTIONS OF  LAW OF RETURNS TO SCALE\">ASSUMPTIONS OF  LAW OF RETURNS TO SCALE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/returns-to-scale\/#STAGES_OF_RETURNS_TO_SCALE\" title=\"STAGES\nOF RETURNS TO SCALE\">STAGES\nOF RETURNS TO SCALE<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/returns-to-scale\/#LAW_OF_INCREASING_RETURNS_TO_SCALE_IRS\" title=\"LAW\nOF INCREASING RETURNS TO SCALE (IRS)\">LAW\nOF INCREASING RETURNS TO SCALE (IRS)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/returns-to-scale\/#LAW_OF_CONSTANT_RETURNS\" title=\"LAW\nOF CONSTANT RETURNS\">LAW\nOF CONSTANT RETURNS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/returns-to-scale\/#LAW_OF_DECREASING_RETURNS\" title=\"LAW\nOF DECREASING RETURNS\">LAW\nOF DECREASING RETURNS<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"has-text-align-center wp-block-heading\" id=\"law-of-returns-to-scale\"><span class=\"ez-toc-section\" id=\"LAW_OF_RETURNS_TO_SCALE\"><\/span><strong>LAW\nOF RETURNS TO SCALE<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<p>Returns to scale tells how <a href=\"https:\/\/commerceiets.com\/production-function\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"production (opens in a new tab)\">production<\/a> changes in response to an increase in all inputs in the long run. An industry can exhibit constant returns to scale, increasing returns to scale or decreasing returns to scale.<\/p>\n\n\n\n<p>In the long- run, there is no fixed factor;\nall factors are variable. The laws of returns to scale explain the relationship\nbetween output and the scale of inputs in the long-run when all the inputs are\nincreased in the same proportion.<\/p>\n\n\n\n<p><strong>ACCORDING TO KOUTSOYIANNIS<\/strong><\/p>\n\n\n\n<p>\u201cThe term returns to scale refers to the changes in\noutput as all factors change by the same proportion.\u201d <\/p>\n\n\n\n<p><strong>ACCORDING TO LEIBHAFSKY<\/strong><\/p>\n\n\n\n<p>\u201cReturns to scale relates to the behaviour of total\noutput as all inputs are varied and is a long run concept\u201d.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"assumptions-of-law-of-returns-to-scale\"><span class=\"ez-toc-section\" id=\"ASSUMPTIONS_OF_LAW_OF_RETURNS_TO_SCALE\"><\/span><strong>ASSUMPTIONS OF  LAW OF RETURNS TO SCALE<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>&nbsp;Laws of Returns to Scale are based on the following assumptions:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>All the factors of production (such as land,\nlabour and capital) are variable but organization is fixed.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>There is no change in technology.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>There is perfect competition in the market.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Outputs or returns are measured in physical\nquantities.<\/li><\/ul>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"stages-of-returns-to-scale\"><span class=\"ez-toc-section\" id=\"STAGES_OF_RETURNS_TO_SCALE\"><\/span><strong>STAGES\nOF RETURNS TO SCALE<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The various\nstages of law of return to scale can be shown from the following table:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"318\" height=\"330\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/rs.jpg\" alt=\"rs.jpg\" class=\"wp-image-3789\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/rs.jpg 318w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/rs-289x300.jpg 289w\" sizes=\"auto, (max-width: 318px) 100vw, 318px\" \/><\/figure>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"law-of-increasing-returns-to-scale-irs\"><span class=\"ez-toc-section\" id=\"LAW_OF_INCREASING_RETURNS_TO_SCALE_IRS\"><\/span><strong>LAW\nOF INCREASING RETURNS TO SCALE (IRS)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If the output\nof a firm increases more than in proportion to an equal percentage increase in\nall inputs, the production is said to exhibit increasing returns to scale.<\/p>\n\n\n\n<p><strong>ACCORDING TO MARSHALL<\/strong><\/p>\n\n\n\n<p>&#8220;An&nbsp;<em>increase of\nlabour and capital leads generally to improved organisation which increases the\nefficiency of the work of labour and capital. Therefore, an increase of labour\nand capital generally gives a return which increases more than in\nproportion.&#8221;<\/em><\/p>\n\n\n\n<p><strong>ACCORDING TO BENHAM<\/strong><\/p>\n\n\n\n<p><em>&#8220;As\nthe proportion of one factor in a combination of factors is increased, upto a\npoint, the marginal productivity of the factor will increase.&#8221;<\/em><\/p>\n\n\n\n<p><strong>ACCORDING TO MRS. JOAN ROBINSON<\/strong><\/p>\n\n\n\n<p><em>&#8220;Increasing\nReturns to a factor states that when an increasing amount of a factor of\nproduction is employed it generally brings about an improvement in\norganisation. As a result of it, units of the factor concerned become more\nefficient and to increase production it will not be necessary to increase the\nphysical quantity of the factor in the same proportion.&#8221;<\/em><\/p>\n\n\n\n<p><strong>For example:<\/strong> If the\namount of inputs are doubled and the output increases by more than double, it\nis said to be an increasing returns to scale. When there is an increase in the\nscale of production, it leads to lower average cost per unit produced as the\nfirm enjoys economies of scale.<\/p>\n\n\n\n<p>This can be explained with the help of following diagram:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"264\" height=\"295\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/CURVE-INCREASING-SCALE.jpg\" alt=\"CURVE INCREASING SCALE.jpg\" class=\"wp-image-3790\"\/><\/figure>\n\n\n\n<p>In the figure, OX axis represents\nincrease in labour and capital while OY axis shows marginal production. When\nlabour and capital increases, output also increases which is higher than the\nfactors of production i.e. labour and capital.<\/p>\n\n\n\n<p><strong>CAUSES OF\nINCREASING RETURNS TO SCALE<\/strong><\/p>\n\n\n\n<p>The\nfollowing are the reasons of increasing returns to scale:<\/p>\n\n\n\n<p><strong>INDIVISIBILITY OF FACTORS OF\nPRODUCTION:<\/strong> There are some factors of\nproduction which are purchase in some fixed quantity and cannot be divided into\nsmall pieces; such factors of production are described as indivisible factors.<\/p>\n\n\n\n<p>This indivisibility of factor of production is an\nadvantage to the firm producing on a large scale.<\/p>\n\n\n\n<p>By increasing production the cost of production goes on\ndecreasing. Indivisibility is specially found in case of men and machines.<\/p>\n\n\n\n<p>The machines have a minimum size whatever may be the\nlevel of out-put, the minimum size has to be employed. Naturally, with\nincreasing output the cost of production will decline and the firm will reap\nthe benefits of increasing return to scale.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Marketing Indivisibilities:<\/strong> These relates to the employment of salesmen, main\u00adtenance of purchase, department and advertisement. The larger the scale of production less will be the per unit cost.<\/li><li><strong>Financial Indivisibilities:<\/strong> These relate to the managing costs of loans securities issued in large quantities can be listed in the stock exchange where-as the smaller quantities will increase the cost.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Research\nIndivisibilities:<\/strong> The research and innovation\ndepartment need some bare essential sum of money on men and material needed for\nresearch projects, less than that of research cannot be carried on. Thus, there\nare Critical minimum efforts needed to carry on the production job irrespective\nof the scale of production. With the increase in the scale of production the\ncost of production declines which give rise to the Laws of Increasing Return to\nscale.<\/li><\/ul>\n\n\n\n<p><strong>SPECIALISATION OF FACTOR OF PRODUCTION: <\/strong>The second major reason for the operation of Law of Increasing Return to scale is the specialisation of the factor of production and division of labour. These results in greater production or increasing return to scale. The concept of division of labour and specialisation can be extended to the organization.<\/p>\n\n\n\n<p>Each manager specialises in his work resulting in\nincreasing return to scale. Apart from the above two major factors the other\nimportant constituents of Law of Increasing Return to scale is the economies of\nlarge scale production i.e., internal and external economies of scale.<\/p>\n\n\n\n<p><strong>DIMENSIONAL\nEFFICIENCY:<\/strong> Increasing returns to scale is\nthe result of operating dimensional efficiency in a business firm which is on\naccount of the large size. The size increases the efficiency of all inputs and\nthe increasing returns operates. Thus the investment in capital assets after a\npoint will increase the output due to increased dimension of efficiency.<\/p>\n\n\n\n<p><strong>ECONOMIES\nOF LARGE SCALE:<\/strong> When the scale of production is\nincreased the internal and external economies of scale will operate and on\naccount of it the increasing returns to scale will also operate.<\/p>\n\n\n\n<p>Internal\neconomies are on account of firm\u2019s size and organisation while external\neconomies are caused by the concentration and localisation of industries. All\nthese economies lead to increase in output more than in proportion to the\nchange in the ratio of two inputs.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"law-of-constant-returns\"><span class=\"ez-toc-section\" id=\"LAW_OF_CONSTANT_RETURNS\"><\/span><strong>LAW\nOF CONSTANT RETURNS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When all\ninputs are increased by a certain percentage, the output increases by the same\npercentage, the production function is said to exhibit constant returns to\nscale.<\/p>\n\n\n\n<p><strong>For example:<\/strong><\/p>\n\n\n\n<p>If a firm\ndoubles inputs, it doubles output. In case, it triples output. The constant\nscale of production has no effect on average cost per unit produced.<\/p>\n\n\n\n<p>This\ncan be explained with the help of following diagram:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"376\" height=\"353\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/crs.png\" alt=\"crs.png\" class=\"wp-image-3791\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/crs.png 376w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/crs-300x282.png 300w\" sizes=\"auto, (max-width: 376px) 100vw, 376px\" \/><\/figure>\n\n\n\n<p>    If   the proportional increase in all inputs is equal to the proportional increase   in output (production), returns to scale are constant. For instance, if a   simultaneous doubling of all inputs results in a doubling of production, then   returns to scale are constant. 100% increase in the inputs may raise the   production level to 100%.    <\/p>\n\n\n\n<p><strong>CAUSES OF CONSTANT RETURNS TO SCALE<\/strong><\/p>\n\n\n\n<p>The\nfollowing are the various causes of returns to scale:<\/p>\n\n\n\n<p><strong>INTERNAL\nECONOMIES AND DISECONOMIES:<\/strong> As the firm expands further, internal economies are\ncounterbalanced by internal diseconomies. Returns increase in the same proportion\nso that there are constant returns to scale over a long range of output.<\/p>\n\n\n\n<p><strong>EXTERNAL\nECONOMIES AND DISECONOMIES:<\/strong> The returns to scale are constant when external\ndiseconomies and economies are neutralized and output increases in the same\nproportion.<\/p>\n\n\n\n<p><strong>DIVISIBLE\nFACTORS:<\/strong> When\nfactors of production are perfectly divisible, substitutable and homogeneous\nwith perfectly elastic supplies at a given price, returns to scale are\nconstant.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"law-of-decreasing-returns\"><span class=\"ez-toc-section\" id=\"LAW_OF_DECREASING_RETURNS\"><\/span><strong>LAW\nOF DECREASING RETURNS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Where the proportionate increase in the inputs does not lead\nto equivalent increase in output, the output increases at a decreasing rate,\nthe law of decreas\u00ading returns to scale is said to operate. This results in\nhigher average cost per unit.<\/p>\n\n\n\n<p><strong>ACCORDING TO&nbsp;BOULDING<\/strong><\/p>\n\n\n\n<p><em>&#8220;As\nwe increase the quantity for any one input which is combined with fixed\nquantity of other inputs, the marginal physical productivity of the variable\ninput must eventually decline.&#8221;<\/em><em><\/em><\/p>\n\n\n\n<p><strong>ACCORDING TO PROF. BENHAM&nbsp;<\/strong><\/p>\n\n\n\n<p><em>&#8220;As\nthe proportion of one factor in a combination of factors is increased after a\npoint, the marginal and average product of that factor will diminish.&#8221;<\/em><em><\/em><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/drs-1.png\" alt=\"drs.png\" class=\"wp-image-3792\"\/><\/figure>\n\n\n\n<p>All factors of production (land, labor and\ncapital) have been doubled. There is 100 percent increase in the factors of\nproduction whereas output has increased less than double.It means increase in\nall inputs leads to a less than proportional increase in the output of the firm.\nHere diminishing returns to scale are operating. Diminishing returns to scale\nis achieved in those activities involving natural resources such as growing\nagricultural products.<\/p>\n\n\n\n<p><strong>CAUSES OF DECREASING RETURNS TO SCALE<\/strong><\/p>\n\n\n\n<p><strong>(I) DISECONOMIES OF LARGE SCALE:<\/strong> When the scale of production is increased the\ninternal and external diseconomies of scale operate. On account of these\ndiseconomies the output increases less than in proportion to the change in the\ninputs and the diminishing returns to scale operates.<\/p>\n\n\n\n<p><strong>(II) DELAY IN DECISION-MAKING AND ITS\nIMPLEMENTATION:<\/strong> With the size of scale of\nproduction the decisions are taken at different levels of management. Delay in\ndecision-making and its implementation lead to increase in output less than in\nproportion to the change in all variable inputs. Pressure from top management,\nred-tapism and diseconomies of managerial skill lead to diminishing returns to\nscale.<\/p>\n\n\n\n<p><strong>(III) MANAGERIAL INEFFICIENCY:<\/strong> With the increase in the size and scale of\nproduction in the long period the management becomes a complicated process. It\nresults into managerial inefficiency leading to operation of diminishing returns\nto scale.<\/p>\n\n\n\n<p><strong>(IV) INDUSTRIAL UNREST:<\/strong> With the increase in the size and scale of\nproduction the number of workers increases. There will be political affiliation\nof trade unions leading to strikes, lockouts, go slow tactics, gheraos, etc.\nThese labour problems are not easily solved by the management. It adversely\naffects the production of individual firms or industries and diminishing\nreturns to scale operates.<\/p>\n\n\n\n<p><strong>(V) ENTREPRENEUR NOT VARIABLE:<\/strong> Entrepreneur is one of the factors of\nproduction. He is neither variable nor divisible input. In practice he is fixed\nand indivisible input and on account of change in other variable inputs the\nratio under the large scale leads to imbalances and the law of diminishing\nreturns to scale operates.<\/p>\n\n\n\n<p><strong>(VI) OVER-EXPLOITATION OF SCARCE INPUTS:<\/strong> When the scale of production is increased and some of the scarce inputs are exploited to unlimited extent the increase in output is less in proportion to change in all inputs during long period and diminishing return to scale operates.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/demand\/\">Theory of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-demand\/\">Law of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/demand-function\/\">Demand Function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/exceptions-of-law-of-demand\/\">Exceptions of law of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/elasticity-of-demand\/\">Elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/change-in-demand\/\">Change in demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/price-elasticity-of-demand\/\">Price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-law-of-demand-and-elasticity-of-demand\/\">Law of demand Vs Elasticity of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/factors-affecting-price-elasticity-of-demand\/\">Factors affecting price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/production-function\/\">Production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-short-run-long-run-production-function\/\">Short run vs long run production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-variable-proportions\/\">Law of variable proportions<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/types-of-demand\/\">Types of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/managerial-economics\/\">Managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/characteristics-of-managerial-economics\/\">Characteristics of managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-managerial-economics\/\">Scope of managerial economics<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/utility-analysis\/\">Utility analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-marginal-utility\/\">Law of diminishing marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/\">Law of equi marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium\/\">Consumers Equilibrium<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/indifference-curve-analysis\/\">Indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium-using-indifference-curve-analysis\/\">Consumer equilibrium using indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-tp-ap-and-mp\/\">Relationship between TP, AP and MP<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-increasing-returns\/\">Law of increasing returns<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-returns\/\">Law of diminishing returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-constant-returns\/\">Law of constant returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/returns-to-scale\/\">Returns to Scale<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/economies-and-diseconomies-of-scale\/\">Economies and diseconomies of scale<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/concept-of-costs\/\">Concept of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-ac-and-mc\/\">Relationship between AC and MC<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/traditional-theory-of-cost\/\">Traditional theory of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/modern-theory-of-cost\/\">Modern theory of costs<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explicit-vs-implicit-costs\/\">Explicit vs Implicit costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue\/\">Revenue<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-competition\/\">Perfect competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-meaning\/\">Monopoly<\/a>&nbsp;<\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/price-discrimination\/\">Price discrimination<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-perfect-competition-and-monopoly\/\">Difference between perfect competition and monopoly<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-and-monopolistic-competition\/\">Perfect Vs Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-and-monopolistic-competition\/\">Monopoly and monopolistic competition<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/product-differentiation-strategy\/\">Product differentiation strategy<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopolistic-competition\/\">Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/national-income-in-india\/\">National Income in India<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/measurement-of-national-income\/\">Measurement of national income in India<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/consumption-function\/\">Consumption function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/keynesian-psychological-law-of-consumption\/\">Keynes Psychological law of consumption<\/a><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>LAW OF RETURNS TO SCALE Returns to scale tells how production changes in response to an increase in all inputs in the long run. An industry can exhibit constant returns to scale, increasing returns to scale or decreasing returns to scale. In the long- run, there is no fixed factor; all factors are variable. The&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/returns-to-scale\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;RETURNS TO SCALE&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3794,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[113,92],"tags":[],"class_list":["post-3787","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-managerial-economics","category-micro-economics"],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3787"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3787\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3794"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}