Constant Returns to Scale
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Where is there constant returns to scale?
At the MES
What economies of scale can be employed during constant returns to scale
Bulk buying and marketing/financial
In what time scale is there constant returns to scale?
In the long run where both labor and capital are variable.
Constant Returns to Scale
When an increase in inputs cause the same proportional increase in output.
Increasing Returns to Scale
When an increase inputs leads to a bigger than proportional increase in output.
Decreasing Returns to Scale
When increasing inputs leads to a proportionately smaller increase in output.
Minimum Efficiency Scale
the lowest level of output at which the long-run average total cost is minimized
