Asked by
Shane Olenick
on Oct 14, 2024
Verified
A firm has a production function f(x, y) 1.80(x0.10 y0.10) 2 whenever x 0 and y 0.When the amounts of both inputs are positive, this firm has
A) increasing returns to scale.
B) decreasing returns to scale.
C) constant returns to scale.
D) increasing returns to scale if x y 1 and decreasing returns to scale otherwise.
E) increasing returns to scale if output is less than 1 and decreasing returns to scale if output is greater than 1.
Production Function
A mathematical formula that describes the relationship between inputs used in production and the output of goods or services.
Returns To Scale
A concept in economics that describes the change in output as a result of a proportional change in all inputs.
Input
Resources used in the production process, including labor, materials, and capital.
- Discern the forms of returns to scale (inflating, deflating, consistent) through a careful review of production function exponents.
Verified Answer
RH
Learning Objectives
- Discern the forms of returns to scale (inflating, deflating, consistent) through a careful review of production function exponents.