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Returns to scale is a
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- timeless phenomenon
- directionless phenomenon
- short-run phenomenon
- long-run phenomenon
- timeless phenomenon
Correct Option: D
Returns to Scale refers to changes in production that occur when all resources are proportionately changed in the long run. It comes in three forms-increasing, decreasing, or constant based on whether the changes in production are proportionally more than, less than, or equal to the proportional changes in inputs. It is the guiding principle for long-run production, playing a similar role that the law of diminishing marginal returns plays for short-run production.