What is Returns to Factor?
Returns to a factor refer to the rise in the total product that results from increasing just one factor while holding the other factors constant. The production of the firm displays the Law of Variable Proportions in the short term when one input is variable, and the other inputs are fixed. There are three phases of Returns to Factor; viz., Increasing Returns to a Factor, Decreasing Returns to a Factor, and Negative Returns to a Factor.
Difference between Returns to Factor and Returns to Scale
Returns to Factor and Returns to Scale refer to the rise in the total product because of increasing just one factor while holding the other factors constant and change in the factor inputs simultaneously in the same proportion in the long run respectively.