Returns to Scale
Definition
A long-run concept describing what happens to output when all factor inputs are increased proportionally. Three types: (1) Increasing Returns to Scale (output increases more than proportionally), (2) Constant Returns to Scale, (3) Decreasing Returns to Scale.
Example
"If a factory doubles all inputs (labour and capital) and output more than doubles (e.g., from 100 to 250 units), it experiences Increasing Returns to Scale due to specialization and efficiency gains."