Suppose a firm's production function can be specified as $Q = 10 K L$. This firm's cost function exhibits
A) economies of scale
B) diseconomies of scale
C) neither diseconomies nor economies of scale.
D) economies of scale for output levels less than some level, $Q _ { 1 } = 1 / 4$, and diseconomies of scale thereafter.

Question

Quizplus · Accepted Answer

The production function $Q = 10KL$ exhibits constant returns to scale because if both inputs (capital, K, and labor, L) are increased by a certain proportion, output (Q) increases by the same proportion, indicating economies of scale.

Suppose a Firm's Production Function Can Be Specified As Q=10KLQ = 10 K LQ=10KL

Suppose a Firm's Production Function Can Be Specified As $Q = 10 K L$