With the production function
,if we double __________,we have an increasing returns production.

Question

With the production function 
,if we double __________,we have an increasing returns production.

Quizplus · Accepted Answer

According to the production function given (11ea895d_4d57_44b5_8397_f1bc463f68b3_TB4305_11), the output depends not only on capital and labor but also on the stock of ideas. If we double capital or labor alone, we would only get a proportional increase in output, i.e., constant returns to scale. However, if we double all three factors - capital, labor, and the stock of ideas - then output would increase more than proportionally, giving us increasing returns to scale. Therefore, the best choice is D - capital, labor, and the stock of ideas.

With the Production Function