Constant returns to scale (CRS)implies that ________.
A)increasing all the factor inputs by the same percentage lead to the same percentage increase in output
B)increasing all the factor inputs by the same percentage lead to a higher percentage increase in output
C)increasing all the factor inputs by the same percentage lead to a lower percentage increase in output
D)increasing all the factor inputs by the same percentage leaves output unchanged
E)none of the above

Question

Quizplus · Accepted Answer

Constant returns to scale means that if all factor inputs (such as labor, capital, and materials) are increased by the same proportion, then output will increase by that same proportion. For example, if inputs are doubled, output will also double, meaning there is a 100% increase in both inputs and output. This is consistent with choice A.

Constant Returns to Scale (CRS)implies That ________