Difference between revisions of "Decreasing returns to scale"
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| − | '''Decreasing returns to scale''' occur when the percent increase in productivity due to an increase in [[input]] is less than the percent all the inputs were increased. For example, if a company increases its input by 50% and their output increases by only 25%, | + | '''Decreasing returns to scale''' occur when the percent increase in productivity due to an increase in [[input]] is less than the percent all the inputs were increased. |
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| + | For example, if a company increases its input by 50% and their output increases by only 25%, the company has decreasing returns to scale. | ||
[[Category:Economics]] | [[Category:Economics]] | ||
Revision as of 05:04, July 11, 2009
Decreasing returns to scale occur when the percent increase in productivity due to an increase in input is less than the percent all the inputs were increased.
For example, if a company increases its input by 50% and their output increases by only 25%, the company has decreasing returns to scale.