The LAC and LMC curves in the diagram below are consistent with a production function that exhibits
A) decreasing returns to scale.
B) constant returns to scale.
C) increasing returns to scale.
D) increasing returns to scale for small levels of output, then constant returns to scale, and eventually decreasing returns to scale as output increases.
E) decreasing returns to scale for small levels of output, then constant returns to scale, and eventually increasing returns to scale as output increases.

Question

The LAC and LMC curves in the diagram below are consistent with a production function that exhibits 
A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) increasing returns to scale for small levels of output, then constant returns to scale, and eventually decreasing returns to scale as output increases. 
E) decreasing returns to scale for small levels of output, then constant returns to scale, and eventually increasing returns to scale as output increases.

Quizplus · Accepted Answer

The Answer of The LAC and LMC curves in the diagram below are consistent with a production function that exhibits 
A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) increasing returns to scale for small levels of output, then constant returns to scale, and eventually decreasing returns to scale as output increases. 
E) decreasing returns to scale for small levels of output, then constant returns to scale, and eventually increasing returns to scale as output increases.

The LAC and LMC Curves in the Diagram Below Are