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 (x1,…, xn). If the function satisfies the assumption of constant returns to scale then
for any λ ≥ 0.