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T-ACCOUNT: A handy little diagram used to illustrate changes in the assets and liabilities of a bank's balance sheet. A T-account, so named because or its perpendicular lines that look like a T, represents changes in assets on the left and changes in liabilities and net worth on the right.
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                           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.
Recommended Citation:CONSTANT RETURNS TO SCALE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: August 4, 2021].
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages trying to buy either a remote controlled World War I bi-plane or a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki. Be on the lookout for malfunctioning pocket calculators.
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This isn't me! What am I?
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There were no banks in colonial America before the U.S. Revolutionary War. Anyone seeking a loan did so from another individual.
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"Motivation is everything. You can do the work of two people, but you can't be two people. Instead, you have to inspire the next guy down the line and get him to inspire his people." -- Lee Iacocca, Chrysler chairman
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ERISA
Employee Retirement Income Security Act of 1974
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