Does this production function, q = 10L0.5K0.3, experience increasing,
Does this production function, q = 10L0.5K0.3, experience increasing, decreasing or constant returns to scale?
A) Decreasing because a 100% increase in inputs increases outputs by 80%.
B) Increasing because an 80% increase in inputs increases outputs by 100%.
C) Decreasing because 0.5 + 0.3 < 1.
D) A and C.
ANSWER
D
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