Q for micro economics (1 Viewer)

[username]

What is the difference between marginal returns to a variable input and returns to scale?

 

[Grizzly]

grrr at forums dying when i hit submit >8(

*thinks bak to last year*

i think they are the same thing.
to achieve economies of scale or get diseconomies of scale, the firm would have to vary the amount of input.

e.g
5% increase in labor => 10% increase in output (eco. of scale)
5% increae in labor => 2% increase in output (diseco. of scale)

Remember the law of dimishing returns.

Hope it helps.