Does it make sense to consider the returns to scale of a production function in the short run?
A) Yes, this is an important short-run characteristic of production functions.
B) Yes, returns to scale determine the diminishing marginal returns of the inputs.
C) No, returns to scale is a property of the consumer's utility function.
D) No, we cannot change all of the production inputs in the short run.

Question

Quizplus · Accepted Answer

Returns to scale refer to the relationship between the scale of production and the output. In the short run, it is not possible to change all inputs and hence, returns to scale cannot be measured accurately. Therefore, option D is the correct choice.

Does It Make Sense to Consider the Returns to Scale