Constant Returns to Scale

When an increase in inputs (think lemons, sugar, and labor) causes the same, proportional increase in output (think lemonade).

Got two more lemons, two more sugar cubes, and two more minutes? Two more lemonades, coming up.

In contrast, there’s also “decreasing returns to scale,” otherwise known as “scales of economy,” which is when you get big enough that you get disproportionately more output with more input. Which is why mega corporations can put mom n' pop shops out of business. Mega corporations are saving on costs thanks to decreasing returns to scale, while mom n' pop shops are dealing with constant returns to scale.