When a firm doubles its inputs, its output:
A)will double.
B)will less than double.
C)will more than double.
D)All of these are possible.

Question

Quizplus · Accepted Answer

The output response to doubling inputs depends on the production function's returns to scale. If the production function exhibits constant returns to scale, output will double. If it exhibits decreasing returns to scale, output will less than double. If it exhibits increasing returns to scale, output will more than double. Therefore, all of these outcomes are possible depending on the specific characteristics of the production function.

When a Firm Doubles Its Inputs, Its Output