distinguish between returns to factors and returns to scale
1Returns to a factor applies in the short period and returns to scale appplies in the long run.
2. In returns to a facor factor proportion changes but in returns to scale factor proportions remain the same
3. In returns to a factor as we go on increasing a variable factor on certain fixed factors, the firm experiences-increasing returns, diminishing returns and negative returns. But under returns to scale when all the factors are increased in the same proportion, the firm experiences-increasing returns , constant returns and diminishing returns to scale.
4. Increasing returns to a factor occur because of division of labour, specialisatin etc. But to scale occur because of internal and external economies.
5. Diminishing ret to a factor occure because of congestion, over crowding etc. To scale occur because of diseconomies.
2. In returns to a facor factor proportion changes but in returns to scale factor proportions remain the same
3. In returns to a factor as we go on increasing a variable factor on certain fixed factors, the firm experiences-increasing returns, diminishing returns and negative returns. But under returns to scale when all the factors are increased in the same proportion, the firm experiences-increasing returns , constant returns and diminishing returns to scale.
4. Increasing returns to a factor occur because of division of labour, specialisatin etc. But to scale occur because of internal and external economies.
5. Diminishing ret to a factor occure because of congestion, over crowding etc. To scale occur because of diseconomies.