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 expands from 6 units of capital and 2 units of labor
To 12 units of capital and 4 units of labor,the production function exhibits:
A)increasing returns to scale.
B)constant returns to scale.
C)decreasing 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 expands from 6 units of capital and 2 units of labor
To 12 units of capital and 4 units of labor,the production function exhibits:
A)increasing returns to scale. 
B)constant returns to scale. 
C)decreasing returns to scale. 
D)diminishing marginal returns.

Quizplus · Accepted Answer

When the inputs are increased by a factor of 2, the output increases by a factor of 4(24 to 96). This indicates increasing returns to scale.

Use the Following Table to Answer the Questions