Which of the following is possible in a 2-input production technology.
A)The technology has increasing returns to scale but diminishing marginal product of all inputs.
B)The technology has increasing returns to scale but diminishing marginal product of all but one input.
C)The technology has decreasing returns to scale but increasing marginal product of one input.
D)(a) and (b)
E)(a) and C
F)(b) and (c)
G)None of the above
H)All of the above

Question

Quizplus · Accepted Answer

Increasing returns to scale can coexist with diminishing marginal products if the proportional increase in output is greater than the proportional increase in inputs, while each input's additional contribution decreases.

Which of the Following Is Possible in a 2-Input Production