## Quick Reference

A property of a function of one or several variables such that a uniform relative change in all of its arguments results in an equal relative change in the value of the function; also referred to as linear homogeneity. For example, a Cobb–Douglas production function exhibits constant returns to scale when the elasticities of all inputs with respect to output sum up to one. Formally, consider the function *f*(*x*_{1},…, *x*_{n}). If the function satisfies the assumption of constant returns to scale then

*f*(*λx*_{1},…,λ*x*_{n}) = λ*f*(*x*_{1},…,*x*_{n})

for any λ ≥ 0.

*Subjects:*
Economics.