What is returns to scale? What is the difference between law of variable proportions and returns to scale? for 4 marks.
Is returns to scale included in our syllabus?

Under Law of variable proportion: only one variable input varies all other variable kept constant. 

Under Law of Return to Scale: All the variable inputs varies except the enterprise. 

Law of variable proportion is for short period; law of return to scale is for long period. 

Law of variable proportion shows the relationship if one variable input increase (eg: Labour) by keeping all other variable constant; total product and MARGINAL product increase upto a certain point after that it will increase at a diminishing rate. it shows in three stage first increase then constant and then decrease. 

Law of return to scale shows the relationship between inputs and output at three different stages: 1. output increase more than inputs, 2. output and input are constant, 3. output is less than proportionate input.