Returns to Scale is the variation or change in productivity that is the outcome from a proportionate increase of all the input. It focus only on the relation between input and output quantities. It occurs when the output increases by a larger proportion than the increase in inputs during the production process. Returns to Scale faced by a firm are purely technologically imposed and are not influenced by economic decisions or by market conditions. When increasing returns to scale occurs, it results in economies of scale.
Returns to Scale
