Question

Give any two differences between returns to a factor and returns to scale.

Distinguish between returns to scale and returns to a variable factor. 

Distinguish between returns to scale and returns to a variable factor with the help of suitable examples.

Answer 1

Sr. No.	Basis	Returns to a Factor	Returns to Scale
1.	Law	It means or indicates a change in the level of output due to a change in any one factor, keeping other factors constant.	It means or indicates a change in the level of output due to a change in all the factors of production at a particular rate.
2.	Variability of factors	Here, factor proportion, i.e., K/L, changes.	In this case, factor proportion, i.e., K/L, remains constant.
3.	Types of returns	Three possible returns to a factor are increasing return, constant return, and diminishing return to a factor.	There are three types of returns to scale, like increasing returns to scale, constant returns to scale, and decreasing returns to scale.
4.	Applicability	It’s applicable in the short run.	It’s applicable in the long run.
5.	Example:	Adding more workers to a fixed number of machines.	Doubling both labor and machines and observing output change.