Constant return to scale (CRTS)
It shows the relationship between output and input unit which is represented by a straight linear curve. It is used to determine the efficiency level of an organization. If the level of input unit increases then the output unit increases proportionately. The organization is able to maintain the efficiency level by producing the same level of output unit with an equivalent increase in input unit. The ratio of output unit with respect to input unit will always remain constant.
For example- A muffler manufacturer produces 100 mufflers with an investment of Rs 1000. If he doubles the investment he produces double the quantity of mufflers. Therefore, the return is proportionate.
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