Constant returns to scale (规模报酬不变 guī mó bào chóu bù biàn) occurs when an increase in the factors of production employed causes the corresponding output increases in exactly the same proportion. For instance, if the inputs are increased by 20%, then the output will increase by 20% as well.
Part 1: Breakdown of Words
- Returns to scale (规模报酬 guī mó bào chóu) describes the change in output when the factors of production changes, given all other conditions equal.
- “Scale” (规模 guī mó) derives from:
- “规” (guī) as in “regulations” (法规 fǎ guī), or “specification” (规格 guī gé).
- “模” (mó) as in “model” (模型 mó xíng), or “module” (模块 mó kuài).
- “Return” (报酬 bào chóu) derives from:
- “报” (bào) as in “report” (报道 bào dào), “intelligence” (情报 qíng bào), or “revenge” (报复 bào fù).
- “酬” (chóu) as in “reward” (酬劳 chóu láo), or “thank with gift” (酬谢 chóu xiè).
- “Constant” (不变 bù biàn) as in “constant temperature” (恒温 héng wēn):
- “不” (bù) means “not/non-/-less/a-“, or negative in Chinese, as in “cannot” (不能 bù néng), “not allowed” (不许 bù xǔ), or “do not” (不要 bù yào).
- “变” (biàn) as in “variable” (变量 biàn liàng), “transform” (转变 zhuǎn biàn), or “change” (变化 biàn huà).
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