ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -How do you calculate return to scale? Return to scale is calculated by multiplying each input function by a multiplier. If the result is greater than the multiplier, it increases returns to scale. If the result is less than the multiplier, then the production function will result in decreasing return to scale.

Detailed explanation-2: -Increasing returns to scale is when the output increases in a greater proportion than the increase in input. Decreasing returns to scale is when all production variables are increased by a certain percentage resulting in a less-than-proportional increase in output.

Detailed explanation-3: -Increasing returns to scale (IRS) refers to a production process where an increase in the number of units produced causes a decrease in the average cost of each unit.

Detailed explanation-4: -Increasing Returns to Scale: When our inputs are increased by m, our output increases by more than m. Constant Returns to Scale: When our inputs are increased by m, our output increases by exactly m. Decreasing Returns to Scale: When our inputs are increased by m, our output increases by less than m.