Scenario 17-1.An economy's production form takes the form Y = AF(L,K,H,N).
-Refer to Scenario 17-1.If the production function has the constant-returns-to-scale property,then it could be rewritten as
A) Y/L = AF(1,K/L,H/L,N/L)
B) Y/L = AF(L,1,H/L,N/L)
C) Y/L = AF(L,K/L,1,N/L)
D) Y/L = AF(L,K/L,H/L,1)

Question

Quizplus · Accepted Answer

Constant returns to scale means that if all inputs are increased by the same proportion, output will also increase by that same proportion. Therefore, the ratio of output to any one input (in this case, labor L) should remain constant. Rewriting the production function as Y/L = AF(L,K,H,N)/L is consistent with this property, and the other options do not maintain constant ratios of output to inputs.