What are the possibilities of returns to scale in production technology?

Three possibilities are there as: technology exhibits (a) constant returns to scale; (b) decreasing returns to scale, and (c) increasing returns to scale. Properly, we have (global) returns to scale. There production function f (x) is demonstrates as:

a. constant returns to scale when f (tx) = tf (x) for all t > 0;

b. decreasing returns to scale when f (tx) < tf (x) for all t > 1;

c. increasing returns to scale when f (tx) > tf (x) for all t > 1;

Posted Date: 9/9/2013 3:16:37 AM | Location : United States

Ask an Expert

Related Discussions:- What are the possibilities of returns to scale in production, Assignment Help, Ask Question on What are the possibilities of returns to scale in production, Get Answer, Expert's Help, What are the possibilities of returns to scale in production Discussions

Write discussion on What are the possibilities of returns to scale in production
Your posts are moderated

Write your message here..

Related Questions

Define the effects of monopoly, There are various implications of the monop... There are various implications of the monopoly model; many of which lead to criticisms of monopoly on issues of both technical /allocative efficiency.  The prices and output verifi

Business cycle and foreign exchange market, Comment on the current account ... Comment on the current account trend since 2013 till 2015

MIF, What is the purpose of the IMF and why might the IMF be called the “le... What is the purpose of the IMF and why might the IMF be called the “lender of last resort”? Discuss how three of the tools they use for establishing economic stability in a country

What do you mean by bond, Q. What do you mean by Bond? Bond: A financia... Q. What do you mean by Bond? Bond: A financial security that represents promise of its issuer (generally a company or a government) to repay a loan over a specified time period

Rationale for government intervention, Rationale for government interventio... Rationale for government intervention There are six major functions the government can perform in an economy. 1. The government provides a legal and social framework within which

Macroeconomics, Real and nominal GDP, GNP, and Intrest rates, Stock & flow... Real and nominal GDP, GNP, and Intrest rates, Stock & flow variables, Disinflation, Inflation rates, unemployement rates, labor force, participation rate, output per person, GDP d

Direct and indirect benefits, Direct and Indirect Benefits Life time e... Direct and Indirect Benefits Life time earnings of an educated person is an instance of direct benefit from education. Skills produced in training or extension programmes in a

Consumer behaviour, compare and contrast between cordinal and ordinal appr... compare and contrast between cordinal and ordinal approaches

Free good, Which of the following is a free good? Fresh water, forests in t... Which of the following is a free good? Fresh water, forests in the northwestern United States, the advice of economists, or none of the above?

Aggregate demand and aggregate supply, In a small rural town, 150 people wo... In a small rural town, 150 people would like to be employed (this is the supply of labor). In order to make profits, capitalists hire some of these workers to produce grain. Those