Question

What is the difference between return to scale and return to variable factor?

Answer 1

Returns to the scale refers to the change in the output when all the factors of production are increased simultaneously in the same proportion.

Whereas, the returns to variable factor refers to the change in output when one factor of production is changed while all other factors are kept constant.

Also read:

• Price Elasticity of Supply
• Income Elasticity of Demand Formula
• Elasticity of Demand
• Price Elasticity of Demand Formula

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