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Returns to scale

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Provide one business example for increasing returns to scale and decreasing returns to scale respectively. How does this characteristic affect its business strategies? Justify your arguments.

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The expert examines returns on scale.

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Returns to scale refers to technical property of production which examines the effect on output if the input changes i.e. the consequent on output if the proportion of the input changes. It is not always possible that the change in input results as proportionate change in output. If the output increases more than the proportionate change in input, there are increasing returns to scale and if the output increases less than the proportionate change in input, there are decreasing returns to ...

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  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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