scale are available if for all λ > 1 and for all λ<1. A converse condition can be stated for decreasing returns to scale. Economies of scale If Y is a separable production set with a production value function fp, then (positive) economies of scale are present if for all and for all The opposite condition may be referred to as negative economies (or diseconomies) of scale. If Y has a single output and prices are positive, then positive economies of scale are equivalent to increasing returns to scale. As with returns to scale, economies of scale may apply over a region. If a mill is operating below capacity then it will offer positive economies of scale, but as it approaches capacity the economies will become negative. Economies of scale for the firm are important in influencing an industry's tendency to concentrate in the direction of monopoly or disaggregate in the direction of perfect competition. Limitation The components of a production vector are conventionally portrayed as flows (see Stock and flow), whereas more general treatments regard production as combining stocks (e.g. land) and flows (e.g. labour) (see Factors of production). Accordingly, the simple definition of 'profit' as the net value of output does not correspond to its meaning elsewhere in economics (see Profit (economics)). See also Production–possibility frontier References Production economics