Constant returns to scale means that, given any constant x 0 A) $x Y = z F ( x K , x N d )$. B) $x Y = x z F ( x F , x N d )$. C) $x Y z F ( x K , x N d )$. E) $x Y = Z ^ { x F ( K , N d ) }$.

Question

Constant returns to scale means that, given any constant x > 0 
A) $x Y = z F ( x K , x N d )$.
B) $x Y = x z F ( x F , x N d )$.
C) $x Y < z F ( x K , x N d )$.
D) $x Y > z F ( x K , x N d )$.
E) $x Y = Z ^ { x F ( K , N d ) }$.

Quizplus · Accepted Answer

Constant returns to scale means that if we increase all inputs (both capital and labor) by a constant factor x, then the output increases by the same factor x. Mathematically, this can be expressed as $x Y = z F ( x K , x N d )$, which is choice A. The other options are not correct representations of constant returns to scale.

Constant Returns to Scale Means That, Given Any Constant X xY=zF(xK,xNd)x Y = z F ( x K , x N d )xY=zF(xK,xNd)

Constant Returns to Scale Means That, Given Any Constant X $x Y = z F ( x K , x N d )$