We are assuming that returns to scale are
A) scalable.
B) constant.
C) increasing.
D) zero.

Question

Quizplus · Accepted Answer

Returns to scale refer to the rate at which output increases with respect to an increase in inputs. If returns to scale are constant, then a proportionate increase in inputs would lead to the same proportionate increase in output. This suggests that the firm is operating at an optimal scale and can efficiently adjust its inputs to meet changes in demand without experiencing significant changes in production costs.

We Are Assuming That Returns to Scale Are