Is there a contradiction between the increasing return to scale and the excess of factor input?

1. The reasons for the increase in scale returns: labor specialization; geometric scale factors; Factor of production.

indivisibility; The large-scale activities of manufacturers will bring benefits to it in terms of financing, purchasing raw materials and semi-finished products, and selling.

2. The reason for the unchanged scale reward: driven by the pursuit of profits, enterprises will continue to expand their production scale after tasting the benefits of expanding their production scale, and the company's income will slowly enter the stage of unchanged scale.

3. The reason for the diminishing return to scale: due to the large production scale of the manufacturer, it is difficult to effectively coordinate all aspects of production, thereby reducing the production efficiency.

Extended information: 1. The change of scale remuneration of enterprises can be divided into three situations: increasing scale returns, unchanged scale returns and decreasing scale returns

For example, suppose a factory with a monthly output of 100,000 tons of fertilizer uses 10 units of capital and 5 units of labor. Now to double the production scale of the enterprise, that is, to use 20 units of capital, 10 units of labor, due to the change in the scale of production of the number of ears and yards, the change in income may be in the following three situations:

1. The proportion of the increase in output is greater than the proportion of the increase in production factors, that is, the output is more than 200,000 tons, which is called the increase in scale returns.

2. The proportion of the increase in output is less than the proportion of the increase in production factors, that is, the output is less than 200,000 tons, which is called the decrease in the income of scale.

3. The proportion of the increase in output is equal to the proportion of the increase in production factors, that is, the output is 200,000 tons, which is called the constant return of scale.

There are three stages of scale returns: increasing, constant and decreasing, and the reason for the change in scale returns is due to economies of scale.

or economies of scale. Economies of scale refer to the reduction of the average cost of a product due to the expansion of the level of output, or the expansion of the scale of production.

2. Economies of scale.

Also known as:"Scale benefits"(scale merit) refers to the fact that the average cost is decreasing as the output increases within a certain production range. Economies of scale are due to fixed costs within a certain range of output.

If you don't think there is much change, then the new products can share more of the fixed costs, so that the total cost goes down. According to the requirements of the law of change in the combination of productivity factors, people consciously select and control the scale of production, and seek the best economic benefits by increasing the amount of production and reducing the cost.

Economies of scale, or economies of scale in productivity, are the question of determining the optimal scale of production.

Economies of scale include sectoral economies of scale, urban economies of scale, and enterprise economies of scale. In Western economics.

Economies of scale are mainly used to study corporate economics. However, as an important category of productivity economics, economies of scale have a broader meaning, including all levels of economic scale from macro to micro that can obtain economic benefits.

Scale returns are increasing withEconomies of scaleEconomies of scale are when the total output increases more than the total cost when the enterprise expands its scale, that is, the long-term average total cost decreases. Otherwise, it is called diseconomies of scale.

Remuneration for scale, also known as income of scale, is the result of all factors of production.

The return obtained from the proportional change in the input volume (i.e., the change in the scale of production) represents the impact on the output (i.e., the total output) when the input of all production factors increases in proportion to the same amount. It is divided into three types: constant scale return, increasing scale return and decreasing scale return.

Reasons for diseconomies of scale.

There may be other sources, but one of the main factors is the inefficiencies in management that come with over-volume production. For any enterprise, the larger the production scale and the more management levels, the more difficult it is to coordinate and control the fiber consumption within the enterprise; Information is easily lost or distorted in the process of transmission up and down, and it is increasingly difficult for managers to communicate with each other and between managers and workers.

Remuneration of scale refers to the various kinds within the enterprise under the condition that other conditions remain unchangedFactor of production. The change in yield due to the same proportion. The change of scale remuneration of enterprises can be divided into three situations: increasing scale returns, unchanged scale returns and decreasing scale returns. The proportion of the increase in output is greater than the proportion of the increase in factors of production, and this situation is called an increasing return to scale.

Reason for the increase: specialization of labor.

In mass production, workers can work more effectively and collaboratively, and it is much more efficient for each person to specialize in a specific task than for each person to complete each process from start to finish. This is the benefit of specialization, which was introduced by Adam Smith, the father of economics, as early as the 18th century.

Put forth. In The Wealth of Nations

He took the pin industry as an example, a person who has not received professional training can only barely make a pin a day, but if the production is divided into 18 processes, each person only undertakes one process, the per capita daily output reaches 4,800 pins, and the economies of scale brought by specialization.

It's remarkable.

geometric scale factors;

Economies of scale are also implicit in certain geometrical factors, such as the fact that large equipment typically costs less to manufacture and repair per unit of output than smaller equipment. For example, if the circumference of an oil pipeline is doubled, the cross-sectional area (transportation capacity) of the pipeline will be more than doubled, and the transportation cost per unit** will be reduced.

Indivisibility of factors of production.

Some advanced processes and technologies, such as computer management, assembly operations, etc., can only be used when the output reaches a certain level, that is, these processes and technologies for mass production are usually inseparable. According to statistics, if an automobile manufacturer produces more than 300,000 vehicles per year, the cost can be greatly reduced compared with small-scale production.

Financial factors. The large-scale activities of manufacturers will bring benefits to it in terms of financing, purchasing raw materials and semi-finished products, and selling. For example, sometimes the capital required by large manufacturers can be met by the accumulation of the manufacturers themselves, and at the same time, they can get bank loans by virtue of their scale advantages.

and the facilitation of the issuance of ** and bonds. In the purchase of raw materials and semi-finished products, due to the large quantity, in addition to the transportation advantage, you can also take advantage of the specified quality, large discounts, the conclusion of purchase contracts and other favorable conditions to make production costs. Lower.

Can exist at the same time.

Because the premise of the two is different, the premise of the law of diminishing marginal returns is that there is only one factor of production, while the premise of the law of increasing returns to scale is that all kinds of factors of production within the enterprise change. For example, when the Hubb-Douglas production function, when + 1, both cases are at the same time.

Increasing remuneration of scale: specialized division of labor; geometric scale factors; Indivisibility of factors of production. The large-scale activities of manufacturers will bring benefits to it in terms of financing, purchasing raw materials and semi-finished products, and selling.

Unchanged remuneration of scale: Driven by the pursuit of profits, enterprises will continue to expand their production scale after tasting the benefits of expanding their production scale, and their earnings will slowly enter the stage of unchanged scale.

Diminishing returns to scale: Due to the large scale of production, it is difficult to effectively coordinate all aspects of production, thus reducing production efficiency.

The only way to fundamentally reverse the trend of diminishing returns is to improve the ability to innovate across the board.

By increasing the rate of return and contribution rate of innovation, the impact of the trend of diminishing returns can be offset, and finally a new situation of increasing returns (the growth rate of benefits is significantly faster than the growth rate of output) will be formed, which is a direct manifestation of high-quality development. In this way, the conversion of old and new kinetic energy can be completed.

**The Economic Work Conference emphasized "accelerating the transformation and application of scientific and technological achievements and accelerating the improvement of enterprises' technological innovation capabilities", which is to emphasize the important role of "innovation" in promoting high-quality development.

This is the same as the principle of "diminishing marginal utility", with the great abundance of social materials, the trend of diminishing returns in the growth mode of factor input cannot be fundamentally reversed.