Production in the Long Run Homework Help: your way to success!
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We are here only for your help and, therefore, here is some knowledge on the topic you could use.
A brief idea of Production in the Long Run
The period of time during which all the factors of production can be varied is known as Long Run.
When all the inputs are simultaneously changed, we call this change in the scale of production. The way Total Output changes due to change in scale of production are known as Laws of Returns to Scale. Applicable in the Long Run only, Returns to Scale can be of three kinds, as discussed:
- Constant Returns to Scale:
If increase in output is in the same proportion as an increase in quantity of all the inputs, Returns to Scale is said to be constant.
- Increasing returns to Scale:
When an increase in output is more than proportional compared to the increase in all inputs, the case is known as Increasing Returns to Scale.
- Decreasing Returns to Scale:
If the output increases in a smaller proportion compared to inputs, the Returns to Scale is said to be decreasing.
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