scale of a firm’s operations so that more of all inputs is being used.
increasing returns (to scale)
A situation in which output increases more than in proportion to inputs
as the scale of a firm’s production increases. A firm in this situation is a
decreasing-cost firm.
minimum efficient scale (MES)
The smallest output at which LRAC reaches its minimum. All available
economies of scale have been realized at this point.
constant returns (to scale)
A situation in which output increases in proportion to inputs as the scale
of production is increased. A firm in this situation is a constant-cost firm.
decreasing returns (to scale)
A situation in which output increases less than in proportion to inputs as
the scale of a firm’s production increases. A firm in this situation is an
increasing-cost firm.
technological change
Any change in the available techniques of production.
productivity
Output produced per unit of some input; frequently used to refer to
labour productivity, measured by total output divided by the amount of
labour used.