Economics · International Trade Theories
In international trade theory, the concept of 'Constant Returns to Scale' refers to a production condition where:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Output increases at a higher rate than the increase in inputs.
- 2An equal percentage increase in all inputs used in production results in an identical percentage increase in output.✓
- 3Increasing input quantities lead to a diminishing marginal physical product.
- 4The average cost of production continuously falls as output increases.
Correct answer
An equal percentage increase in all inputs used in production results in an identical percentage increase in output.
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