Constant returns to scale

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Updated: Aug 20, 2021

A property of a function of one or several variables such that a uniform relative change in all of its arguments results in an equal relative change in the value of the function; also referred to as linear homogeneity. For example, a Cobb-Douglas production function exhibits constant returns to scale when the elasticities of all inputs with respect to output sum up to one.

Constant returns to scale

Reference: Oxford Press Dictonary of Economics, 5th edt.


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James Knight
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James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.