If the equation Y = F(K,L) represents a constant returns to scale production function, then for any positive constant c the following must also hold:

Question

Quizplus · Accepted Answer

According to the constant returns to scale property, if we increase the inputs by a constant factor c, then the output will also increase by a constant factor c. This can be represented by the equation: Y = F(K,L) implies cY = F(cK,cL). Therefore, option D is the correct choice as it represents this relationship.

If the Equation Y = F(K,L) Represents a Constant Returns