In the long run, all factors of production are variable. No factors are set. As a result, the volume of production can be changed by changing the quantity of all factors of production. Before reading this article, I know nothing about the law of return to scale, but after reading your article, it can be calculated using the following formula: economies of scale, R = m (C-1) + m (L-1) where C = capital, L = labor implies that a high degree of specialization of man and machine contributes to increasing the volume of production. The use of specialized labour and machinery helps to increase the productivity of labour and capital per unit. This leads to increasing economies of scale. While declining marginal yields and economies of scale examine how changes in output affect changes in inputs, there are important differences between the two that need to be taken into account. For example, if a soap manufacturer doubles its total consumption but achieves only a 40% increase in its total production, it can be said that it has seen a decrease in economies of scale. If the same manufacturer doubles its total production, it has achieved constant economies of scale. When performance increased by 120%, the manufacturer saw increasing economies of scale.

The assumptions of the law of economies of scale are as follows: Use of fixed technologyUses only capital and labour in a fixed ratioThe factors that affect the price are constant Economies of scale in economics refer to a term that states that the degree of change in input factors changes proportionally and simultaneously during the production process. It reflects the quantitative change that applies in the long term with similar technology. It forms the basis for measuring the efficiency of a company`s or industry`s production capacity. If the proportional change in an organization`s output is greater than the proportional change in inputs, output is said to reflect increasing economies of scale. For example, to produce a particular product, when the quantity of inputs is doubled and the increase in output is more than doubled, it is referred to as increasing returns to scale. As the volume of production increases, the average cost per unit of output decreases. Indeed, an organization benefits from high economies of scale at this stage. Assuming that factor costs are constant (i.e., the firm is a perfect competitor in all input markets) and that the production function is homogeneous, a firm with long-run constant average costs will have long-run constant average costs, a firm with diminishing returns will have increasing long-run average costs, and a firm with increasing returns will have long-term average costs.

descending terms. [1] [2] [3] However, this relationship breaks down if the firm is not faced with perfectly competitive factor markets (i.e. in this context, the price paid for a good depends on the quantity purchased). For example, if there are increasing economies of scale in a certain range of production levels, but the firm is so large in one or more input markets that increasing its purchases of an input increases the cost per unit of input, then the firm could have economies of scale in that range of production levels. Conversely, if the firm is able to obtain massive discounts for an input, then it could achieve economies of scale in a certain range of production levels, even if its production is declining in that production area. In Figure 1, Level II represents constant economies of scale. During this phase, the savings accumulated in the first phase begin to disappear and diseconomies appear. The term diseconomies refers to the limiting factors of business expansion. The emergence of diseconomies is a natural process when a company grows beyond a certain stage. In Phase II, economies of scale and economies of scale in a given production area are precisely in balance. If a firm has constant economies of scale, an increase in all inputs leads to a proportional increase in output, but to some extent.

The increase in economies of scale indicates a percentage increase in output relative to the percentage increase in inputs. This means that if output increases more than the increase in total input, it is called increasing economies of scale. For example, if all inputs are increased by 10% and output increases by more than 10%, this is the case when economies of scale increase. The concept of increasing economies of scale can be explained using the following timetable and graph. In Figure 13, a movement from a to b indicates that the amount of inputs is doubled. Now the input combination has reached 2K+2L from 1K+1L. However, production increased from 10 to 25 (150% increase), which is more than twice as high. When the input changes from 2K-H2L to 3K+3L, the output increases from 25 to 50 (100% increase), which is greater than the input variation. This shows increasing economies of scale. Increased economies of scale or lower costs refer to a situation where all factors of production are increased, production increases at a higher rate.

This means that if all entries are doubled, production increases faster than doubles. Therefore, it is said to increase economies of scale. This increase is due to many reasons, such as economies of scale. The increase in economies of scale can be illustrated using Figure 8. Let`s take a numerical example to explain the behavior of the law of economies of scale. In this diagram 9, diminishing economies of scale have been shown. On the OX axis, labor and capital are shown, while on the OY axis output is given. If the factors of production increase from Q to Q1 (more quantity), but the production increases, that is.