Returns to Scale explained through Isoquants

approach

Since in short run one factor is fixed but in long run

both factors are variable so returns to scale can be
explained using Isoquants. The laws of returns to
scale can also be explained in terms of the isoquant
approach. The laws of returns to scale refer to the
effects of a change in the scale of factors (inputs)
upon output in the long-run when the combinations
of factors are changed in some proportion.
I :IRS through Isoquant approach

Fig 1
Fig 1:shows the case of increasing returns to scale where to get equal
increases in output, lesser proportionate increases in both factors,
labour and capital, are required.
OA > AB > BC. So isoquants comes close to each other which
means less quantities of inputs are required to produce output.
This is increasing returns to scale.
II.DIMINISHING RETURNS TO SCALE (DRS) through Isoquant
approach

Fig 2
 DRS with Isoquants
Fig .2 the case of decreasing returns where to get equal
increases in output, larger proportionate increases in both
labour and capital are required. OG < GH < HK. i.e large
quantities of inputs are required to produce inputs. Hence the
successive distance between isoquants increases.
III CRS through Isoquant approach
Fig .3 shows the case of constant returns Where the distance
between the isoquants 100, 200 and 300 along the expansion
path OR is the same, i.e., OD = DE = EE It means that if units
of both factors, labour and capital, are doubled, the output is
doubled. To treble output, units of both factors are trebled.
 CONCLUSION
In all the fig 1,2 and 3 , ray OR represents expansion path is a
line connecting optimal input combinations as firm changes its
scale of operation hence it is known as scale line or expansion
path.
To conclude in IRS , Isoquants come closer to each other,
DRS far apart and CRS isoquants are equally spaced.