Constant returns to scale (CRS)implies ________.
A)constant returns to labor
B)constant returns to capital
C)increasing marginal products
D)variable total factor productivity
E)diminishing marginal products

Question

Quizplus · Accepted Answer

Constant returns to scale implies that increasing all inputs by a certain proportion results in an increase in output by the same proportion. This does not necessarily imply constant returns to labor or capital individually, nor does it imply increasing marginal products. Diminishing marginal products can still occur under CRS as individual inputs are increased while holding others constant.

Constant Returns to Scale (CRS)implies ________