When an equal percentage increase in the factors of production raises real GDP by the same percentage,the production function has the characteristic known as
A)constant returns to scale.
B)constant marginal productivity.
C)diminishing marginal productivity.
D)increasing returns to scale.

Question

Quizplus · Accepted Answer

Constant returns to scale is a characteristic of the production function where an equal percentage increase in all inputs (factors of production) results in the same percentage increase in output or real GDP. This means that the marginal productivity of all inputs remains constant as their quantities increase. Therefore, the correct choice is A) constant returns to scale. The other choices (B, C, and D) refer to different characteristics of the production function, but they do not fit the condition described in the question.

When an Equal Percentage Increase in the Factors of Production