Google
Tuesday 
April 16, 2024 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
WANTS AND NEEDS: These are the unfulfilled desires that motivate human behavior and that when satisfied improve human well-being. They include both physiological or biological requirements for maintaining life (needs) and the psychological desires which make life more enjoyable (wants). However, when push comes to shove, and the nitty gets down to the gritty, it matters very little to markets if people need goods or want goods, so long as they are motivated to buy the goods to satisfy wants and needs.

Visit the GLOSS*arama


CONSTANT RETURNS TO SCALE:

A given proportional change in all resources in the long run results in the same proportional change in production. Constant returns to scale exists if a firm increases ALL resources--labor, capital, and other inputs--by 10 percent, and output also increases by 10 percent. This is one of three returns to scale. The other two are increasing returns to scale and decreasing returns to scale.
Constant returns to scale results if long run production changes are greater than proportional changes in all inputs used by a firm.

Suppose, for example, that The Wacky Willy Company employs 1,000 workers in a 5,000 square foot factory to produce 1 million Stuffed Amigos (those cute and cuddly armadillos, tarantulas, and scorpions) each month. Constant returns to scale exists if the scale of operation expands to 2,000 workers in a 10,000 square foot factory (a doubling of the inputs) and production increases to exactly 2 million Stuffed Amigos.

The anticipated pattern for most production activities is that increasing returns to scale emerge for relatively small levels of production, which is then following by constant returns to scale and decreasing returns to scale.

Returns to scale are the flip side of economies and diseconomies of scale. Although economies and diseconomies of scale focus on changes in average cost, returns to scale focus on production. One way to view constant returns to scale is the quantity of production or the range or production in which the forces underlying increasing returns to scale exactly balance the forces underlying decreasing returns to scale.

<= CONSTANT-COST INDUSTRYCONSTRAINED UTILITY MAXIMIZATION =>


Recommended Citation:

CONSTANT RETURNS TO SCALE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: April 16, 2024].


Check Out These Related Terms...

     | long-run production analysis | returns to scale | increasing returns to scale | decreasing returns to scale | long-run, microeconomics |


Or For A Little Background...

     | short-run production analysis | production inputs | production time periods | product | production | production cost | variables | labor | capital | law of supply | supply | principle | business | marginal analysis | factors of production | microeconomics | economies of scale | diseconomies of scale |


And For Further Study...

     | total product | marginal product | average product | production function | price elasticity of supply | division of labor | production possibilities | law of increasing opportunity cost | law of diminishing marginal returns | marginal returns | production stages | very long-run, microeconomics | constant-cost industry |


Search Again?

Back to the WEB*pedia


APLS

RED AGGRESSERINE
[What's This?]

Today, you are likely to spend a great deal of time watching the shopping channel seeking to buy either a birthday gift for your grandmother or a T-shirt commemorating yesterday. Be on the lookout for vindictive digital clocks with revenge on their minds.
Your Complete Scope

This isn't me! What am I?

In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
"Recipe for success. Study while others are sleeping; work while others are loafing, prepare while others are playing, and dream while others are wishing."

-- William A. Ward

X-M
Net Exports
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2024 AmosWEB*LLC
Send comments or questions to: WebMaster