Suppose the production function for good q is given by q = 3K + 2 L where K and L are capital and labor inputs.Consider three statements about this function:
I.The function exhibits constant returns to scale.
II.The function exhibits diminishing marginal productivities to all inputs.
III.The function has a constant rate of technical substitution.
Which of these statements is true?
A) All of them.
B) Only I.
C) I and II but not III.
D) I and III but not II.

Question

Quizplus · Accepted Answer

The function q = 3K + 2L is linear, indicating constant returns to scale (doubling inputs doubles output) and a constant rate of technical substitution (ratio of marginal products is constant). However, it does not exhibit diminishing marginal productivities, as the marginal products of K and L are constant.

Suppose the Production Function for Good Q Is Given by Q