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The Following Is a Cobb-Douglas Production Function: Q = 1

Question 19

Multiple Choice

The following is a Cobb-Douglas production function: Q = 1.75K0.5·L0.5.What is correct here?


A) A one-percent change in L will cause Q to change by one percent
B) A one-percent change in K will cause Q to change by two percent
C) This production function displays increasing returns to scale
D) This production function displays constant returns to scale
E) This production function displays decreasing returns to scale

Correct Answer:

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