A Level Economics AQA 2025 – 400 Free Practice Questions to Pass the Exam

'Return to scale' refers to the changes in output resulting from a proportional change in all inputs used in the production process. When a firm changes its scale of production—say, by doubling all inputs—'return to scale' examines how output changes in response to that alteration.

If the output more than doubles, the firm experiences increasing returns to scale; if the output exactly doubles, it experiences constant returns to scale; and if the output less than doubles, it faces decreasing returns to scale. Understanding return to scale is crucial for businesses as it helps them to determine the optimal size for production and assess efficiency as they scale operations.

The remaining options touch on other aspects of economics but do not accurately capture the concept of return to scale. For instance, one variable input’s efficiency focuses on the productivity of that specific input without addressing the broader context of all inputs and their proportional changes affecting output. The balance of fixed and variable costs deals more with cost structure than with output changes as inputs vary. Profit maximization techniques are concerned with maximizing profits under certain constraints rather than examining the relationship between input usage and output levels across varying scales of production.