For production functions with decreasing returns to scale, a proportional increase in output
A)Requires a less-than-proportional growth in all inputs
B)Requires a more-than-proportional growth in all inputs
C)Exhibits diminishing returns
D)Requires proportional growth in all inputs

Question

Quizplus · Accepted Answer

In a production function with decreasing returns to scale, increasing all inputs by a certain proportion results in a less-than-proportional increase in output, thus requiring more-than-proportional growth in inputs to achieve a proportional increase in output.

For Production Functions with Decreasing Returns to Scale, a Proportional