1. Define returns to scale. Do you think that most businesses are increasing, constant, or decreasing returns to scale? Also, how is this different from return to a factor? Returns to scale are defined by our text as, “…the relation between output and the proportional variation of all inputs taken together” . Simply put this means if you put 1% in you should expect to get the same out. By increasing scale you would be getting more out than you put in as goes for decreasing scale you would get less out than you put in. Obviously if increasing means more and decreasing means less than constant would infer that you get the same out as put in. Whereas Returns to a factor is defined by the text as, “…the relation between output and variation in a single input, holding other inputs fixed. Returns to a factor can be expressed as total, marginal, or average quantities” . 2. Define monopolistic competition and oligopolies. Provide two real world examples. Also, what are the most telling differences? Monopolistic competition is defined as, “…a market structure that is a hybrid between competition and
This is the end of the preview. Sign up
access the rest of the document.
This note was uploaded on 11/01/2011 for the course MBA 575 taught by Professor Dr.tvorik during the Spring '11 term at St. Leo.