Increasing returns to scale

Increasing returns to scale – An increased return to scale occurs when production is greater than the past due well-organized operational practices, and when the cost per element of assembly is reduced.  Increasing returns to scale is otherwise known as economies of scale or decreasing costs.  This term is best explained through a quick example. Say a production line increases the amount of parts it uses (oftentimes referred to as “inputs”) by 4 times.  An increased return to scale would occur when more than four times of the original products are created, also known as “outputs” from these parts.