Question

Under which time period does the Law of Returns to Scale apply?

• A. Very short period
• B. Short Period
• C. Long Period
• D. Very Long Period

Answer 1

The correct option is C Long Period

Since all factors are only variable in the long run, the scale of production is only changed in the long run thus the law of returns to scale will only apply in the long run. In the short run only the proportion of inputs can be changed and output is subject to the law of variable proportion.