Suppose the production of VCRs can be represented by the following production function: ?q = L⁰.⁴ K⁰.⁴.Which of the following statements is (are)TRUE?

Question

Quizplus · Accepted Answer

The production function has constant returns to scale, which means that if all inputs are increased by the same proportion, output will increase by the same proportion. This is because the exponents of L and K sum to 1. The marginal productivity of labor falls as labor increases in the short run because the production function is concave. Capital and labor can be substituted for one another because the production function is Cobb-Douglas.

Suppose the Production of VCRs Can Be Represented by the Following