The power to perform such an experiment such an objection is ofĬourse irrelevant. It is a scientifically meaningless assertion that doublingĪll factors must double product. by conventional definition of the terms involved- that such a principle can have no empiricalĬontent. With respect to the second point, we may reverse the Aristotelianĭictum and affirm that anything that must be true self-evidently Of homogeneity as due to indivisibility changes nothing and merelyĪffirms by the implication that "indivisibility" does exist, the With regard to the first point, it is clear that labeling the absence The first order of all the variables, and if this is not so, it mustīe either because of "indivisibility" or because not all "factors" Philosophical grounds that product must be a homogeneous function of The problem of homogeneity of the production function is one about The economist mostly responsible for spreading the use of mathematical rigor in economics, Paul Samuelson, who also never lost sight of the essence of economics, writes as follows in "Foundations of Economic Analysis" (1947, Enlarged Edition 1983), p. Since the OP has labeled their question "Economic Interpretation of Returns to Scale": Here if your goal would be to double the output you would need to increase resources by more than a double. This simply means production always increases by smaller proportion than the proportion by which you double the resources. For example you might double the inputs but output would increase by just factor of 1.5. Or in plain English, if you increase the number of inputs by a factor the output will increase by some smaller factors. So if your goal would be doubling the production you would be fine just with less than double of resources and be able to do that. This means that the output will increase by larger proportion than the resources you put in. For example, you might double the number of capital and labor you use but quadruple the output you actually get. Or in plain English, if you increase inputs by some factor output increases by more than that factor. If you want to double production just double amount of labor and capital. This means that an economy can always scale its production by the same proportion by which it scales its resources. So for example if you double the inputs you also double the output $F(2K,2L)=2F(K,L)$. Or in plain English if you increase the number of inputs (here capital $K$ and labor $L$) output will increase by the same factor.
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