The production function f(K,L) = (max\begin{Bmatrix} K,L \end{Bmatrix})^\frac{1}{2} exhibits......
Question:
The production function {eq}f(K,L) = (max\begin{Bmatrix} K,L\end{Bmatrix})^\frac{1}{2} {/eq} exhibits...
A. Decreasing returns to scale
B. Constant returns to scale
C. Increasing returns to scale
D. None of the above
Returns to Scale:
The term returns to scale in economics depicts the overall changes in returns when the firm, in the long run, has increased the product. It shows the linkage between the increase in output production and an increase in the input factors when the inputs are variable.
Answer and Explanation: 1
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View this answerThe correct option is Option (B).
The production function is given as:
{eq}f\left( {K,L} \right) = {\left( {\max \left\{ {K,L} \right\}}...
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Returns to Scale in Economics: Definition & Examples
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Chapter 3 / Lesson 71
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Understand the meaning of returns to scale in economics. Learn about increasing returns to scale, constant returns to scale and decreasing returns to scale.
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