Suppose the production function for good q is given by q = 3K + 2 L where K and L are capital and labor inputs.Consider three statements about this function: Which of these statements is true?
I.The function exhibits constant returns to scale.
II.The function exhibits diminishing marginal productivities to all inputs.
III.The function has a constant rate of technical substitution.
A)All of them.
B)None of them.
C)I and II but not III.
D)I and III but not II.
E)only I.

Question

Quizplus · Accepted Answer

The function exhibits constant returns to scale because doubling inputs doubles output. It has a constant rate of technical substitution as the ratio of marginal products is constant. However, it does not exhibit diminishing marginal productivities since the marginal products of K and L are constant.

Suppose the Production Function for Good Q Is Given by Q