What is the difference between increasing returns to scale and economies of scale?
The difference is that economies of scale refer to a fall in the cost per unit whereas increasing returns to scale refer to a change in output. Although increasing returns to scale contribute to economies of scale the one measures cost and the other output. Present and explain the law of diminishing returns. The law of diminishing returns is when additional units of a variable factor are added to a fixed factor the extra output of the variable factor will eventually diminish. The three main assumptions for the law of diminishing returns are that at least one factor has to be fixed (in other words it has to be in the short run), each unit of the variable factor has to be equal (for example the labor force has to be equally trained etc.) and that the level of technology must be held constant. Difference between decreasing returns to scale and law of diminishing returns. Decreasing returns to scale is in the long run whereas the law of diminishing returns is in the short run. Present and
