Linear homogeneous production functions are often used in analysis because:
A)many real world production processes exhibit constant returns to scale.
B)they can be used to exhibit increasing or decreasing returns to scale.
C)they can be adapted to suit any industry.
D)they apply to any production process.

Question

Quizplus · Accepted Answer

Linear homogeneous production functions are useful in analysis because they exhibit constant returns to scale, which many real-world production processes tend to exhibit. This simplifies the analysis and makes it easier to understand and apply the results to practical situations.

Linear Homogeneous Production Functions Are Often Used in Analysis Because