Copyright

Does the production function q=100L- {50}/{K} exhibit increasing, decreasing, or constant returns...

Question:

Does the production function

{eq}q=100L-\frac{50}{K} {/eq} exhibit increasing, decreasing, or constant returns to scale?

This production function exhibits _____

returns to scale.

Returns to Scale

The scale of an operation is its size. Returns to scale refer to how much production increases as the size of the operation increases. The more equipment is used in an operation, the more productive the workforce can be.

Answer and Explanation: 1

Become a Study.com member to unlock this answer!

View this answer


The production function {eq}q = 100L - \dfrac{1}{K}{/eq} exhibits increasing returns to scale, because as capital is added the production increases.

...

See full answer below.


Learn more about this topic:

Loading...
Returns to Scale in Economics: Definition & Examples

from

Chapter 3 / Lesson 71
209K

Understand the meaning of returns to scale in economics. Learn about increasing returns to scale, constant returns to scale and decreasing returns to scale.


Related to this Question

Explore our homework questions and answers library