Scenario 12-1. An economy's production form takes the form Y = AF(L, K, H, N).
-Refer to Scenario 12-1. If the production function has the constant-returns-to-scale property, then it is possible that the specific form of the production function is
A)Y = 4L + 2K + 3H + N
B)Y = (L + K + H + N)/4
C)
$Y = 2 ( L K H N ) ^ { 1 / 4 }$
D)
$$Y = 4 \sqrt { L ^ { 3 } K ^ { 4 } H N }$$

Question

Quizplus · Accepted Answer

Option C has the constant-returns-to-scale property, which means that if all inputs of the production function are increased by a certain factor, the output also increases by the same factor. This property is captured by the equation Y = 2(LKH)^1/4. The other options do not have the constant-returns-to-scale property. Option A has linear terms, so increasing all inputs by the same factor would not necessarily increase output by the same factor. Option B has a simple average of the inputs, which does not capture the complex interaction between inputs in the production process. Option D has exponents that do not add up to 1, so it does not have constant returns to scale.

Scenario 12-1 Y=2(LKHN)1/4Y = 2 ( L K H N ) ^ { 1 / 4 }Y=2(LKHN)1/4

Scenario 12-1 $Y = 2 ( L K H N ) ^ { 1 / 4 }$