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Which of the following production functions exhibits constant returns to scale?
A) q = KL
B) q = KL0.5
C) q = K + L
D) q = log(KL)
Constant Returns
Refers to a situation in production where increasing the inputs by a certain factor results in output increasing by the same factor.
Production Functions
A mathematical expression that describes the relationship between inputs and the maximum output that can be produced with those inputs.
Scale
The size of a business or operation, which can impact its production cost, efficiency, and ability to compete in the market.
- Outline the disparities between rising, consistent, and falling returns to scale in manufacturing activities.
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Learning Objectives
- Outline the disparities between rising, consistent, and falling returns to scale in manufacturing activities.
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