DECREASING RETURNS TO SCALE: A given proportionate increase in all resources in the long run results in a proportionately smaller increase in production. Decreasing returns to scale exists if a firm increases ALL resources -- labor, capital, and other inputs -- by 10%, and output increases by less than 10%. You might want to compare increasing returns to scale and constant returns to scale. See also | resources | labor | capital | increasing returns to scale | constant returns to scale | diseconomies of scale | long-run average cost | output |
