Constant returns to scale means that,given any constant x 0 A) xzF(xK, xNd)= zF(xK, xNd). B) xzF(xK, xNd) zF(xK, xNd). C) xzF(xK, xNd)

Question

Constant returns to scale means that,given any constant x > 0
A) xzF(xK, xNd)= zF(xK, xNd).
B) xzF(xK, xNd) > zF(xK, xNd).
C) xzF(xK, xNd) < zF(xK, xNd).
D) xzF(xK, xNd) = zxF(K, Nd).

Quizplus · Accepted Answer

Constant returns to scale means that if all inputs are increased by the same proportion, output will increase by the same proportion. In other words, doubling all inputs will double output, tripling all inputs will triple output, and so on.The equation xzF(xK, xNd) = zF(xK, xNd) represents this property. It says that if all inputs are increased by a factor of z, then output will also increase by a factor of z.

Constant Returns to Scale Means That,given Any Constant X >