Which of the following statements is NOT correct?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Returns to scale can be studied in the short run by raising only the variable input.
Returns to scale ask what happens when all inputs rise in the same proportion. That is possible only in the long run; in the short run one factor stays fixed.
Option (1) Returns to scale can be studied in the short run by raising only the variable input. — False. Raising only the variable input changes the factor proportions. That is the law of variable proportions, not returns to scale.
Option (2) Both factors of production can be changed only in the long run. — True. In the short run at least one factor is fixed.
Option (3) Returns to scale are studied when all inputs are increased in the same proportion. — True. This is how returns to scale are defined.
Option (4) The law of variable proportions arises because factor proportions change. — True. With one factor fixed and the other rising, the ratio between them keeps changing.
NCERT (2026-27): “3.6 Returns to Scale The law of variable proportions arises because factor proportions change as long as one factor is held constant and the other is increased. … Remember that this can happen only in the long run. One special case in the long run occurs when both factors are increased by the same proportion, or factors are scaled up.” |