If a production function has constant returns to scale,output can be doubled if
A)labor alone doubles.
B)all inputs but labor double.
C)all of the inputs double.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

If the production function exhibits constant returns to scale, then doubling all inputs will result in a doubling of output because the level of productivity remains the same. This is unlike option A, where output would only increase by a factor of 2 if labor alone doubles. Option B would also not work because if all inputs except labor-double, the level of productivity would not remain constant, and hence output would not necessarily increase by a factor of 2.

If a Production Function Has Constant Returns to Scale,output Can