Returns to scale refers to:

CA Foundation · Business Economics · PYQS · May 2025
Returns to scale refers to:
(A) A. Changes in output as a result of proportionate change in one of the variable factors of production.
(B) B. Changes in output as a result of proportionate change in all factors of production.
(C) C. Changes in output as a result of proportionate change in any two variable factors of production.
(D) D. Changes in output as a result of variation in factor proportions.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Changes in output as a result of proportionate change in all factors of production.

Topics: Theory of Production and Cost

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