Constant Returns to Scale

Law of Constant Returns to Scale When the scope for division of labour gets re­stricted, the rate of increase in the total output remains constant, the law of constant returns to scale is said to operate. This law states that the rate of increase/decrease in volume of output is same to that of rate of increase/decrease in inputs.

If the proportional increase in all inputs is equal to the proportional increase in output (production), returns to scale are constant. For instance, if a simultaneous doubling of all inputs results in a doubling of production, then returns to scale are constant. 100% increase in the inputs may raise the production level to 100%.