Question
In: Economics
For the production function Q = 8L + K , returns to scale: (Multiple choice) -...
For the production function Q = 8L + K , returns to scale:
(Multiple choice)
- Increasing Returns to Scale
- Constant Returns to Scale
- Decreasing Returns to Scale
Solutions
Expert Solution
Answer:- Its correct option is B. i.e, constant returns to scale.
Explanation:-
Q=8L+K
Q=8(1)+1
Q=8+1
Q=9
Now double the input in production.
Q=8(2)+2
Q=16+2
Q=18
Therefore, the return to scale is constant, because when we double the input, the output generate is also double.
Rahul Sunny answered 2 years agoRelated Solutions
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