What is a SITUATION in which this might happen in a business? I don\'t want a nu

Question

What is a SITUATION in which this might happen in a business? I don't want a numerical solution. Rather, I want to know what instance might occur that would cause constant returns to scale.

Also, I have the same question for INCREASING returns to sclae.

Example response: For decr returns to scale, if a firm hires double the amount of managers and also doubles all other input, the managers may not be able to manage their tasks at hand because of how difficult the company has become to handle. Therefore output will be less.

Explanation / Answer

1) Constant returns to scale: outout doubles when input doubles .

Example: Large travel agency might proovide the same service per client and use the same ratio capital (office space ) and labor (tenure agents ) as small industry services fewer clients.

2) Increasing returns to scale : If output more than doubles when input doubled.

Example: Consider example of Computer industry in which one programmer can create a programme in one day . If another programmer joins him then , both can make more than two programmes by sharing their work .In this way we get increasing returns to scale..

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