Returns to scale refers to the change in output when
A) all inputs increase proportionately.
B) labor increases holding all other inputs fixed.
C) capital equipment is doubled.
D) specialization improves.

Question

Quizplus · Accepted Answer

Returns to scale refers to the change in output when all inputs increase proportionately. This means that if all inputs are increased by a certain percentage, the output will also increase by the same percentage. This is different from the concept of economies of scale, which refers to the decrease in average cost as output increases.

Returns to Scale Refers to the Change in Output When