Suppose Farmer Smith hires 4 workers and leases 2 tractors and 15 hectares of farmland for one growing season,and produces 120 000 bushels of crop.The next year he hires 8 workers and leases 4 tractors and 30 hectares of farmland,and produces 240 000 bushels of crop.This firm (the farmer)is exhibiting ________ returns to scale.
A)decreasing
B)increasing
C)constant
D)marginal
E)variable

Question

Quizplus · Accepted Answer

The farmer doubled all inputs (workers, tractors, and farmland) and the output also doubled from 120,000 to 240,000 bushels, indicating constant returns to scale.

Suppose Farmer Smith Hires 4 Workers and Leases 2 Tractors