Returns to a variable factor and returns to scale
Returns to a variable factor refer to the behaviour of output when quantities of one variable factor are increased keeping other factors fixed. Since the proportion between variable factor and the fixed factors change, this law is also called the law of variable proportion. The law usually operates in short period.
Returns to scale refer to the behaviour of output when all the factors are changed simultaneously and in the same proportion. This changes the scale of production and the capacity to produce. That is why this law is called the law of returns to scale. Here the factor proportion remains constant. The law operates in the long period when all the factor inputs are changeable.
Difference. The difference between returns to a variable factor and returns to scale are summed up as below:
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