All the inputs used in production are increased in the same proportion. What are its possible effects on TPP? Explain with numerical example.

Tabular presentation. The above mentioned three stages of returns to scale are further clarified with the help of an imaginary following table, presuming that the firm is employing only two factors, namely, labour and capital (machines), capital in machine-hours and the commodity in metres. It is presumed that according to the following table, combination of 2 units of labour and 1 unit of machine produce 200 metres of cloth in the beginning.

The above table indicates increasing returns from Ist to 3rd combination of inputs; constant returns from 4th to 6th combination of inputs and diminishing returns from 7th to 10th combination of inputs.

Note. Remember, law of increasing returns is also called law of diminishing costs and the law of diminishing returns is labelled as law of increasing costs.