Which of the following statements is correct if constant returns to scale are present?
A)A doubling of inputs will lead to output more than doubling.
B)A doubling of inputs will lead to output also doubling.
C)A doubling of output will lead to inputs more than doubling.
D)Output remains constant irrespective of inputs.

Question

Quizplus · Accepted Answer

Constant returns to scale means that if we increase all inputs in proportion, the output will increase by the same proportion. Therefore, if we double inputs, the output will also double. Thus, option B is correct. Option A is incorrect because it suggests increasing inputs will result in output increasing by more than double, which violates the concept of constant returns to scale. Option C is incorrect because it suggests that increasing output leads to more than double the inputs, which also violates the concept of constant returns to scale. Option D is incorrect because constant returns to scale implies that output will increase with an increase in inputs.

Which of the Following Statements Is Correct If Constant Returns