When a company doubles both its inputs and outputs, what type of returns does this represent?

When a company doubles both its inputs and outputs, it illustrates constant returns to scale. This concept means that if a firm increases its factor inputs (like labor and capital) by a certain percentage, the output increases by the same percentage. In this scenario, the company effectively maintains the same level of efficiency in production; for instance, if it doubles its inputs, the output also doubles, suggesting that the production process remains proportionately effective without any gains or losses in efficiency.

This balance indicates that the firm is operating under ideal conditions, where scaling up operations does not lead to increased per-unit costs or unexpected changes in production efficiency. In contrast, diseconomies of scale would suggest increasing per-unit costs as size increases, while marketing and risk-bearing economies refer to different aspects of scaling in a business context. Thus, the observation of doubling inputs and outputs aligns perfectly with the definition of constant returns to scale.