When the exponents of a Cobb-Douglas production function sum to more than 1,the function exhibits
A)constant returns.
B)increasing returns.
C)decreasing returns.
D)either increasing or decreasing returns.

Question

Quizplus · Accepted Answer

When the exponents of a Cobb-Douglas production function sum to more than 1, the function exhibits increasing returns to scale. This means that if all inputs are increased by a certain percentage, the output will increase by a larger percentage. This is because the function is characterized by complementarity between inputs, which leads to greater productivity gains as more inputs are used.

When the Exponents of a Cobb-Douglas Production Function Sum to More