Sunday, August 19, 2012
Kinds of returns to scale: constant. That's all.
Forget about maths disentangled of economic theory. Even if you can have a mathematical function of degree different than zero, in economics there are just constant returns to scale. If you have the appearance of decreasing returns to scale, that's because an input remains fixed after all. The same is true in the case of apparent increasing returns to scale, save by the fact that in this second case, production is still in the stage of increasing marginal returns.
Labels:
praxeology,
semantics
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