The production function exhibits
A) decreasing returns to scale.
B) constant returns to scale.
C) increasing returns to scale.
D) either decreasing or constant returns to scale, but more information is needed to determine which one.

Question

The production function  exhibits
A) decreasing returns to scale. 
B) constant returns to scale. 
C) increasing returns to scale. 
D) either decreasing or constant returns to scale, but more information is needed to determine which one.

Quizplus · Accepted Answer

The production function 11ea71e2_6316_130b_89cd_8185bd24ac5c_TB1644_11 exhibits increasing returns to scale because when all inputs are increased by the same proportion, the output increases proportionately more than the increase in inputs.

The Production Function Exhibits