The production function $Q ( L , K , M ) = 25 K ^ { 0.5 } L ^ { 0.5 } M ^ { 0 .5 }$ 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

Quizplus · Accepted Answer

Since each input is raised to the power of 0.5, if we multiply all inputs by some constant, the output will increase by a greater multiple, specifically by a factor of $(CK)^{0.5}$. Therefore, the production function exhibits increasing returns to scale.

The Production Function Q(L,K,M)=25K0.5L0.5M0.5Q ( L , K , M ) = 25 K ^ { 0.5 } L ^ { 0.5 } M ^ { 0 .5 }Q(L,K,M)=25K0.5L0.5M0.5

The Production Function $Q ( L , K , M ) = 25 K ^ { 0.5 } L ^ { 0.5 } M ^ { 0 .5 }$