What is the difference between economies of scale and returns to scale? A. Economies of scale define how cost changes with out
put, and returns to scale define how output changes with input usage. B. Economies of scale are present when the long-run average cost curve is increasingincreasing, and returns to scale are present when the long-run average cost curve is decreasingdecreasing. C. Economies of scale define how cost changes with output in the shortshort run, and returns to scale define how cost changes with output in the longlong run. D. Economies of scale define whether joint output of a single firm is greater than output that could be achieved by two different firms when each produces a single product, and returns to scale define how output changes with input usage for a single firm. E. Economies of scale are present when the expansion path is a straight line, and returns to scale are present when the expansion path is not a straight line
a. Economies of scale define how cost changes with output, and returns to scale define how output changes with input usage.
Step-by-step explanation:
The difference between economies of scale and returns to scale is that, the economies of scale shows or define what the effect of an increased output will have on the level of the unit costs, while the return to scale pays attention only on the relationship between out and input quantities. The idea of return scale is an effort to understand specifically how the production is increasing relative to factors contributing to production.
The answer is (A) Economies of scale define how cost changes with output, and returns to scale define how output changes with input usage
Step-by-step explanation:
Economies of scale show the effect of an increased output level on unit costs, Economies of Scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost.
Returns to scale focuses only on the relationship between input and output quantities. Returns to scale is the variation, or change, in productivity that is the outcome from a proportionate increase of all the input.
