Use the following table to answer the questions :
Table 7-4 shows the shows the quantities of labor and capital required to produce various levels of output.

-Refer to Table 7-4.When the firm increases production from 24 units of capital and 8 units of labor to 48 units of capital and 16 units of labor,the production function exhibits:
A)decreasing marginal rate of technical substitution.
B)constant returns to scale.
C)increasing returns to scale.
D)diminishing marginal returns

Question

Use the following table to answer the questions :
Table 7-4 shows the shows the quantities of labor and capital required to produce various levels of output.

-Refer to Table 7-4.When the firm increases production from 24 units of capital and 8 units of labor to 48 units of capital and 16 units of labor,the production function exhibits:
A)decreasing marginal rate of technical substitution. 
B)constant returns to scale. 
C)increasing returns to scale. 
D)diminishing marginal returns

Quizplus · Accepted Answer

The production function exhibits constant returns to scale when doubling the inputs (from 24 units of capital and 8 units of labor to 48 units of capital and 16 units of labor) results in a doubling of output. This means the output increases by the same proportion as the increase in inputs, indicating constant returns to scale.

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