constant returns

constant returns

  1. 1(in the SHORT RUN) constant returns to the VARIABLE FACTOR INPUT that occur when additional units of variable input added to a given quantity of FIXED FACTOR INPUT generate equal increments in output. With an unchanged price for variable factor inputs, constant returns will cause the short-run unit variable cost of output to stay the same over an output range. See RETURNS TO THE VARIABLE FACTOR INPUT.
  2. (in the LONG RUN) constant returns that occur when successive increases in all factor inputs generate equal increments in output. In cost terms, this means the long-run unit cost of output remains constant so long as factor input prices stay the same. See MINIMUM EFFICIENT SCALE, ECONOMIES OF SCALE.
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However, given the considerable compound average annual growth rate (CAGR), which maps the constant returns over a period of time-14% for Makati, 9% for BGC, and 8% for the Bay Area-these areas would actually make for high-yielding investments.
The Charnes, Cooper and Rhodes (CCR) model is based on the assumption of constant returns to scale (CRS) to estimate the gross efficiency; while the BCC (Banker, Chames and Cooper) model is based on variable returns to scale (VRS) to calculate pure technical efficiency (Ramanathan, 2003).
Data Envelopment Analysis (DEA) is applied for constant returns to scale (CRS) and variable returns to scale (VRS) efficiency scores.
The book's chronology gives readers a strong sense of Bolano's development, an emphasis that, though logical and certainly viable on the whole, occasionally straightens the circuitous path Bolano's work often takes, such as its constant returns to a central group of topics, among them reading and writing, the avant-garde, intermediality, gender and sexuality, and political violence.
When we say constant returns to scale, we refer to the mix of inputs and corresponding impact on output.
As an example of constant returns to scale, consider U.S.-Asia ocean vessel shipping.
They predicted that given the assumptions of identical technology and constant returns to scale, a country would tend to export a commodity which requires the intensive use of the country's relatively abundant factor.
Owing to constant returns to scale of the production function, the profits of the firm are equal to zero every period.
Note that output depicts diminishing returns to capital but constant returns over time (because of the exponential growth of capital over time).
Several simplifying assumptions are held throughout, such as that postulating constant returns to scale--the notion that multiplying inputs yields a corresponding multiplication of output.
While the former restricts DMUs to operate with Constant Returns to Scale (CRS), the latter assumes Variable Returns to Scale (VRS).
Output oriented super slacks based model of data envelopment analysis was applied under constant returns to scale (CRS) assumption.

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