If bread is produced by using a constant returns to scale production function, then if the:
A) number of workers is doubled, twice as much bread will be produced.
B) amount of equipment is doubled, twice as much bread will be produced.
C) amounts of equipment and workers are both doubled, twice as much bread will be produced.
D) amounts of equipment and workers are both doubled, four times as much bread will be produced.

Question

Quizplus · Accepted Answer

Constant returns to scale means that doubling inputs would lead to a doubling of output. Therefore, if both the amount of workers and equipment are doubled, the output should also be doubled. Option A and B are incorrect because they only double one input, while option D overestimates the output increase as it assumes a doubling of each input results in a quadrupling of output.

If Bread Is Produced by Using a Constant Returns to Scale