Constant Returns To Scale

In some industries a rather wide range of output may exist between the output at which economies of scale end and the output at which diseconomies of scale begin. That is, a range of constant returns to scale may exist over which long-run average cost does not change. The q1q2 output range of Figure 8-9(a) is an example. Here a given percentage increase in all inputs of, say, 10 percent will cause a proportionate 10 percent increase in output. Thus, in this range ATC is constant.

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