If your firm's production function has constant returns to scale and you increase all your inputs by 60%,then your firm's output will
A)not change.
B)increase,but by less than 60%
C)increase by 60%
D)increase by more than 60%.

Question

Quizplus · Accepted Answer

According to the concept of constant returns to scale, if all inputs of a production function are increased by k%, then the output increases by k%. Therefore, in this case, if all inputs are increased by 60%, the output will also increase by 60%. Hence, choice C is correct.

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