Asked by
Patrick Lynch
on Dec 01, 2024
Verified
A firm has a production function f(x, y) = 2(x0.90 + y0.90) 5 whenever x > 0 and y > 0.When the amounts of both inputs are positive, this firm has
A) increasing returns to scale if x + y > 1 and decreasing returns to scale otherwise.
B) increasing returns to scale.
C) decreasing returns to scale.
D) constant returns to scale.
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 representation in economics that describes the relationship between the inputs used in production and the output of goods or services produced.
Returns To Scale
The change in output resulting from a proportionate increase in all inputs in the production process.
Input
Resources such as labor, materials, and capital used in the production process to create goods or services.
- Classify the types of returns to scale (amplifying, declining, uniform) based on the analysis of production function exponents.
Verified Answer
AA
Learning Objectives
- Classify the types of returns to scale (amplifying, declining, uniform) based on the analysis of production function exponents.