Question

What is the difference between diminishing returns and decreasing returns to scale? What kind of returns to scale are possible or observed in your organization? Why? An expanding company is a sign of increasing returns to scale while a company that is downsizing is usually experiencing decreasing returns to scale.Is your clothing firm expanding or downsizing? Can you assess the shape of the long-run average cost curve for your organization? you do not need to estimate the cost function, merely on the basis of Knowledge of your clothing firm and the returns to scale it is experiencing, what do you think the curve looks like and why?

Answer 1

Answer:
The diminishing returns to scale :
This terminology mainly refer to the fall in output of a production as one input or factor of production is being enhanced or increased, keeping other input fixed.

The decreasing returns to scale :
This terminology refers to fall in the output of a production as all input or factor of production are enhanced or increased.

Diminishing return are short run or short lasting phenomenon. On the other hand decreasing return to scale is long running or long lasting phenomenon.

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