Economics Bytes

What is the concept of Increasing Returns to Scale in the field of Production?

1.Long-run production function demonstrates three types of returns to the scale and increasing returns to scale is one of them.
2.In the long run, it is possible to change all the inputs as a result a firm can expand its output by adjusting a combination of factors of production.
3. When a firm feels to increase its output then it is possible to increase the amount of both labour and capital but factor proportion will remain constant.
4. There are several reasons for the law of increasing returns to scale such as the possibility of specialisation, economies of large scale production etc.

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What is Human Capital Formation?

1.It is the process of acquiring and increasing the number of persons who have the skills, education and experience which are critical for the economic and political development of the country.

2.Human capital formation is thus associated with an investment in man and his development as a creative and productive resource.

3.The most important factor in human capital formation is the development of top skills. As this skill formation is a time-consuming process.

4.Health facilities and services, education, training, housing and migration are important components of human capital formation.

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