A production function of the form Q = 150L^.75 K^.50 exhibits ______ in the long run. A)increasing returns to scale B)decreasing returns to scale C)constant returns to scale D)diminishing returns to the variable input

Question

Quizplus · Accepted Answer

The production function exhibits increasing returns to scale because when all inputs are scaled up (multiplied by a constant greater than 1), the output increases more than proportionally, as indicated by the sum of the exponents on the inputs being greater than 1.

A Production Function of the Form Q = 150L