In a particular production process, if the quantities of all inputs used are increased by 60 percent, then the quantity of output increases by 60 percent as well. This means that
A)the production process cannot be enhanced by technological advances.
B)no mathematical representation of the relevant production function can be formulated.
C)the relevant production function has the limits-to-growth property.
D)the relevant production function has the constant-returns-to-scale property.

Question

Quizplus · Accepted Answer

The fact that the increase in input quantity leads to an equal increase in output quantity indicates that the production function has constant returns to scale (CRS) property. This means that if all inputs are increased by a certain percentage, output also increases by the same percentage, holding the technology constant. Therefore, choice D is the best answer. Choices A, B, and C are incorrect because they do not represent the property of CRS.

In a Particular Production Process, If the Quantities of All