Asked by
Karissa Juneau
on Oct 14, 2024
Verified
A firm has a production function f(x, y) 1.80(x0.80 y0.80) 1 whenever x 0 and y 0.When the amounts of both inputs are positive, this firm has
A) increasing returns to scale.
B) constant returns to scale.
C) decreasing 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 production function describes the relationship between inputs utilized in production and the output generated from those inputs.
Returns To Scale
The rate at which production output increases as a result of a proportional increase in all inputs (labor, capital, etc.).
Input
The resources, materials, or energy used in the production process to generate output.
- Detect the varieties of scale returns (boosting, tapering off, equal) by examination of the exponents in production functions.
Verified Answer
HM
Learning Objectives
- Detect the varieties of scale returns (boosting, tapering off, equal) by examination of the exponents in production functions.