# Distinguish between Return to scale and Law of Diminishing Marginal returns

Last Updated on February 6, 2020 by Naeem Javid Muhammad Hassani

## Distinguish between Return to scale and Law of Diminishing Marginal returns

The return to scale is different from the law of returns. The laws of return state that, as the quantity of one-factor variable inputs in a production process is increased, while the quantity of other inputs remains fixed, marginal physical product first increases than after reaching a maximum starts decreasing and finally become negative.
Whereas return to scale describes the relationship between output and the variable inputs when all the inputs or factors are increased in the same proportion, the output may be more than double or less than double. The law of returns to scale has three stages.

Increasing returns to scale: If the inputs in a production process are increased by 100% and it leads to an increase in production by more than 100% then the production function is said to be one of having an increasing return to scale.

Decreasing return to scale:- If increasing the inputs by 100% leads to increase in production by less then 100% then the production function is said to be having a decreasing return to scale.

Constant returns to scale:- If the inputs of the production process are increased by 100% and output increase exactly by 100% then the production function of the firm is said to be having constant returns to scale.
 S.No. Scale of production Total return (in tons) Marginal return (in tons) 1 1 worker + 5 acres of land 10 10     stage of 15     increasing return 20 30 2 2 worker + 10 acres of land 25 3 3 worker + 15 acres of land 45 4 4 worker + 20 acres of land 75 5 5 worker + 25 acres of land 125 50      stage of constant 50      return 6 6 worker + 30 acres of land 175 7 7 worker + 35 acres of land 200 25      stage decreasing 15      return 5 8 8 worker + 40 acres of land 215 9 9 worker + 45 acres of land 220

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