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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 1 year ago
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