Given a production function Q = 3LK, we can say that
A) this production function is not Cobb-Douglas.
B) this production function is Cobb-Douglas and exhibits decreasing returns to scale.
C) this Cobb-Douglas production function does not exhibit a constant elasticity of substitution.
D) this production function is Cobb-Douglas and exhibits increasing returns to scale.

Question

Quizplus · Accepted Answer

The production function Q=3LK exhibits constant returns to scale because when we multiply all inputs by a certain factor, output is multiplied by the same factor. Specifically, if we multiply K and L by a factor of 2, we get 2K and 2L, and output becomes 3(2K)(2L) = 12KL, which is exactly 2 times the original output of 3KL. This satisfies the definition of increasing returns to scale, so the correct answer is (D).

Given a Production Function Q = 3LK, We Can Say