A production function of the form Q = aL^bK^c: A)implies constant marginal products for the inputs. B)implies constant average products for the inputs. C)incorporates the assumption of diminishing returns to the inputs. D)cannot imply diminishing returns to the inputs.

Question

Quizplus · Accepted Answer

The inclusion of exponents for each input factor in the production function implies diminishing marginal returns to that input. This means that as more units of an input are added, the additional output gained from each additional unit decreases. Therefore, option C is the best choice. Option A is incorrect because constant marginal products would require a linear relationship between inputs and outputs, which is not the case in this production function. Option B is incorrect because the production function does not provide information about average products. Option D is incorrect because the production function can certainly imply diminishing returns to inputs as evidenced by the exponents on each input factor.

A Production Function of the Form Q = ALbKc

A Production Function of the Form Q = AL^bK^c