If the production function is f(x, y)= min{2x + y, x + 2y}, then there are constant returns to scale.

Question

Quizplus · Accepted Answer

To test for constant returns to scale, we need to check if doubling both inputs, x and y, will double the output, f(x,y).

Let's try this:

f(2x, 2y) = 10 min { [2x] + [2y], [2x] + 2[2y] }

= 10 min { 2x + 2y, 2x + 4y }

= 10 min { 2(x + y), 2[x + 2y] }

= 2 * 10 min { x + y, x + 2y }

= 2f(x,y)

Since doubling the inputs leads to a doubling of the output, the production function exhibits constant returns to scale.

If the Production Function Is F(x, Y)= Min{2x + Y