Question : If a change in all input leads to a proportionate change in output, it is a case of:
Option 1: constant returns to the scale
Option 2: diminishing returns to the scale
Option 3: increasing returns to the scale
Option 4: variable returns to the scale
Correct Answer: constant returns to the scale
Solution : The correct option is constant returns to the scale .
Returns to scale describe the long-term relationship between a rise in output and the corresponding increases in inputs. When adding more inputs causes an equivalent rise in output, it is called constant returns to scale (CRS). In other words, it is a case of constant returns to scale.
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