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Returns to Scale

Abstract

The technique of production of a commodityy may be characterized as a function of the required inputsX i :

$$y = f\left( {{x_1},{x_2}, \ldots {x_n}} \right)$$

If all inputs are multiplied by a positive scalar,t, and the consequent output represented astsy, then the value ofs may be said to indicate the magnitude of returns to scale.

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© 2008 Palgrave Macmillan, a division of Macmillan Publishers Limited

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Eatwell, J. (2008). Returns to Scale. In: Durlauf, S.N., Blume, L.E. (eds) The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-58802-2_1429

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