If a production function has constant returns to scale, output can be doubled if:

Group of answer choices:

O labor alone doubles.

O all inputs but labor double.

O all of the inputs double.

O None of the above is correct.

Question

Bailey Terry

Business

6 November, 04:47

If a production function has constant returns to scale, output can be doubled if:

Group of answer choices:

O labor alone doubles.

O all inputs but labor double.

O all of the inputs double.

O None of the above is correct.

+5

Answers (1)

Know the Answer?

Nyla Mason · Answer 1

The correct answer is that if all of the inputs double, output can be doubled.

Explanation:

Constant returns to scale is a situation where output increases at the same level with increase in inputs. In other words. a 20% increase in factors of production brings about the same percentage increase in production.

In other words, the increase in inputs has no impact at all on the cost per unit of output.

Whereas increasing returns to scale means when inputs is increased, output increased by a much more higher percentage.

Lastly, all of the inputs double is a preferred option, because in the long run when returns to scale applies, all factors of production are variable.

If a production function has constant returns to scale, output can be doubled if:Group of answer choices:O labor alone doubles.O all inputs but labor double.O all of the inputs double.O None of the above is correct.

If a production function has constant returns to scale, output can be doubled if:

Group of answer choices:

O labor alone doubles.

O all inputs but labor double.

O all of the inputs double.

O None of the above is correct.