A production function exhibits constant returns to scale when you:
A) hold inputs constant-you double the output.
B) double each input-you more than double the output.
C) double each input-you less than double the output.
D) double one input-you double the output.
E) double each input-you double the output.

Question

Quizplus · Accepted Answer

A production function exhibits constant returns to scale when doubling all inputs results in a doubling of output, which is exactly what option E describes.

A Production Function Exhibits Constant Returns to Scale When You