<P> where K and L are factors of production--capital and labor, respectively . </P> <P> In a more general set - up, for a multi-input - multi-output production processes, one may assume technology can be represented via some technology set, call it T (\ displaystyle \ T), which must satisfy some regularity conditions of production theory . In this case, the property of constant returns to scale is equivalent to saying that technology set T (\ displaystyle \ T) is a cone, i.e., satisfies the property a T = T, ∀ a> 0 (\ displaystyle \ aT = T, \ forall a> 0). In turn, if there is a production function that will describe the technology set T (\ displaystyle \ T) it will have to be homogeneous of degree 1 . </P> <P> The Cobb - Douglas functional form has constant returns to scale when the sum of the exponents is 1 . The function is: </P> <Dl> <Dd> F (K, L) = A K b L 1 − b (\ displaystyle \ F (K, L) = AK ^ (b) L ^ (1 - b)) </Dd> </Dl>

If a firm is experiencing economies of scale in long run production it should