If your firm's production function has constant returns to scale, then if you double all your inputs, your firm's output will
A)double and productivity will rise.
B)double but productivity will not change.
C)more than double and productivity will rise.
D)more than double but productivity will not change.

Question

Quizplus · Accepted Answer

A production function with constant returns to scale means that if all inputs are increased by a certain percentage, output increases by the same percentage. Therefore, doubling inputs will double output without changing productivity.

If Your Firm's Production Function Has Constant Returns to Scale