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"If Constant Returns to Scale Exist for a Firm, Then

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"If constant returns to scale exist for a firm, then a 10 percent rise in all factor prices will lead to a 10 percent decline in the equilibrium quantity of output for a given budget. However, if increasing returns to scale exist, a 10 percent rise in all factor prices will lead to a less than 10 percent decline in the equilibrium quantity of output for a given budget."Assess the validity of this statement.


Definitions:

Net Sales

The total revenue from sales of goods or services minus returns, allowances, and discounts.

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