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Question : Returns to scale is a

Option 1: timeless phenomenon

Option 2: directionless phenomenon

Option 3: short-run phenomenon

Option 4: long-run phenomenon


Team Careers360 1st Jan, 2024
Answer (1)
Team Careers360 8th Jan, 2024

Correct Answer: long-run phenomenon


Solution : The correct option is the long-run phenomenon .

Returns to scale are studied in the long run, where all inputs are flexible. In the long run, a company can optimise its manufacturing process by adjusting its capital, labour and other inputs. As a result, it is possible to examine the effects of changing input levels on output in greater detail, making a return-to-scale analysis relevant.

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