Asked by
Tomasina Sciaretta
on Oct 14, 2024
Verified
if the exponents in the production function were 0.30 for x1 and 0.30 for x2, this production function would exhibit (constant, increasing, decreasing) returns to scale and (would, would not) have diminishing technical rate of substitution.
A) constant, would
B) constant, would not
C) decreasing, would not
D) increasing, would
E) decreasing, would
Production Function
A model in economics that links physical output of a production process to physical inputs or factors of production.
Returns To Scale
An economic concept describing how the output of a production process changes as the scale of inputs is increased, divided into increasing, constant, or decreasing returns to scale.
- Recognize the various returns to scale (expanding, contracting, stable) by examining the exponents in production functions.
- Analyze production functions for identifying whether there is a diminishing technical substitution rate.
Verified Answer
AM
Learning Objectives
- Recognize the various returns to scale (expanding, contracting, stable) by examining the exponents in production functions.
- Analyze production functions for identifying whether there is a diminishing technical substitution rate.