if the exponents in the production function were 0.80 for x₁ and 0.20 for x₂, this production function would exhibit (constant, increasing, decreasing)returns to scale and (would, would not)have diminishing technical rate of substitution. A)constant, would B)decreasing, would not C)increasing, would D)constant, would not E)decreasing, would

Question

Quizplus · Accepted Answer

The sum of the exponents (0.80 + 0.20) is 1, indicating constant returns to scale. The diminishing technical rate of substitution is present because the exponents are positive and less than 1.

If the Exponents in the Production Function Were 0