A certain production process requires only two types of inputs

Question

A certain production process requires only two types of inputs - capital and labor.In 2006,100 units of labor and 50 units of capital were employed,and 100 units of output were produced.In 2013,112 units of labor and 56 units of capital were employed.If the production process displays constant returns to scale,then how many units of output were produced in 2013?
A)100
B)112
C)124
D)144

Quizplus · Accepted Answer

Since the production process displays constant returns to scale, we can assume that the proportional increase in inputs is equal to the proportional increase in output. 
In 2006, the ratio of labor to capital was 100:50 = 2:1. 
Therefore, the production function can be written as Q = f(L,K) = f(2L,K/K)
Similarly, in 2013, the ratio of labor to capital was 112:56 = 2:1. 
Therefore, the amount of output produced in 2013 can be found by: 
Q = f(2(112), 56/50 * 50) = f(224,56) = f(2(100),50) = 2Q 
Thus, the amount of output produced in 2013 is 2 times the amount produced in 2006, which is 100 units. Therefore, the answer is B) 112.