Consider the aggregate production function Y = F(K,L).If the inputs K and L are increased by 5% each and total output (Y)increases by 5% as a result,then this production function is displaying

Question

Quizplus · Accepted Answer

If the output increases by the same percentage as the inputs, then the production function exhibits constant returns to scale. This means that the output increases proportionally with the increase in input.

Consider the Aggregate Production Function Y = F(K,L)