Many production functions have a property called constant returns to

scale. A production function has constant returns to scale if an increase

of an equal percentage in all factors of production causes an increase in
output of the same percentage. If the production function has constant
returns to scale, then we get 10 percent more output when we increase
both capital and labour by 10 percent. Mathematically, a production
function has constant returns to scale if

zY = F (zK, zL)

for any positive number z. This equation says that if we multiply both the
amount of capital and the amount of labour by some number z, output is
also multiplied by z. In the next section, we see that the assumption of
constant returns to scale has an important implication for how the
income from production is distributed.

As an example of a production function, consider production at a bakery.

The kitchen and its equipment are the bakery’s capital, the workers hired
to make the bread are its labour, and the loaves of bread are its output.
The bakery’s production function shows that the number of loaves
produced depends on the amount of equipment and the number of
workers. If the production function has constant returns to scale, then
doubling the amount of equipment and the number of workers doubles
the amount of bread produced.

The Supply of Goods and Services