How do you show constant returns to scale?

More precisely, a production function F has constant returns to scale if, for any > 1, F ( z1, z2) = F (z1, z2) for all (z1, z2). If, when we multiply the amount of every input by the number , the factor by which output increases is less than , then the production function…

More precisely, a production function F has constant returns to scale if, for any > 1, F ( z1, z2) = F (z1, z2) for all (z1, z2). If, when we multiply the amount of every input by the number , the factor by which output increases is less than , then the production function has decreasing returns to scale (DRTS).Click to see full answer. In this regard, how do you find constant returns to scale?The easiest way to find out if a production function has increasing, decreasing, or constant returns to scale is to multiply each input in the function with a positive constant, (t > 0), and then see if the whole production function is multiplied with a number that is higher, lower, or equal to that constant.Beside above, does this production function have constant returns to scale explain? This production function says that a firm can produce one unit of output for every unit of capital or labor it employs. From this production function we can see that this industry has constant returns to scale – that is, the amount of output will increase proportionally to any increase in the amount of inputs. One may also ask, what does it mean to have constant returns to scale? Definition of constant returns to scale When an increase in inputs (capital and labour) cause the same proportional increase in output. Constant returns to scale occur when increasing the number of inputs leads to an equivalent increase in the output.What is the law of returns to scale?The law of returns operates in the short period. It explains the production behavior of the firm with one factor variable while other factors are kept constant. The law of returns to scale describes the relationship between variable inputs and output when all the inputs, or factors are increased in the same proportion.

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