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If output increases by the same proportional change as all inputs change then there are constant returns to scale (CRS). For example, when inputs (labor and capital) increase by 100%, output increases by 100%. If output increases by less than the proportional change in all inputs, there are decreasing returns to scale (DRS). For example, when ...
Where economies of scale refer to a firm's costs, returns to scale describe the relationship between inputs and outputs in a long-run (all inputs variable) production function. A production function has constant returns to scale if increasing all inputs by some proportion results in output increasing by that same proportion.
The presence of increasing returns means that a one percent increase in the usage levels of all inputs would result in a greater than one percent increase in output; the presence of decreasing returns means that it would result in a less than one percent increase in output. Constant returns to scale is the in-between case.
The concept of diminishing returns can be traced back to the concerns of early economists such as Johann Heinrich von Thünen, Jacques Turgot, Adam Smith, [12] James Steuart, Thomas Robert Malthus, and [13] David Ricardo. The law of diminishing returns can be traced back to the 18th century, in the work of Jacques Turgot.
Goldman Sachs predicted this month that the stock market is poised for a decade of tepid gains, ending a long run of big returns for the benchmark index. 4 charts Goldman Sachs is watching as it ...
The total cost curve, if non-linear, can represent increasing and diminishing marginal returns.. The short-run total cost (SRTC) and long-run total cost (LRTC) curves are increasing in the quantity of output produced because producing more output requires more labor usage in both the short and long runs, and because in the long run producing more output involves using more of the physical ...
That perspective helps explain a second chart from Goldman that shows the Magnificent Seven have gained 71% while the other 493 stocks have added just 6%. ... Two other charts included in Goldman ...
Though each chart uses the same data, the ratio scale chart presents a visual that accurately presents the data. In the above examples, the interval chart shows a magnified subsection of the ratio chart. A common example of this type of interval magnification is used in charting stocks. A chart may indicate severe price swings because the chart ...