Economics Supply And Demand Questions
Constant returns to scale is a concept in economics that refers to a situation where an increase in inputs, such as labor and capital, leads to a proportional increase in outputs. In other words, when a firm or industry experiences constant returns to scale, doubling the inputs will result in a doubling of outputs. This implies that the production process is efficient and there are no diminishing or increasing returns to scale. Constant returns to scale are often associated with long-run equilibrium in a perfectly competitive market, where firms can adjust their inputs to achieve optimal production levels.