If is a linear homogeneous production function, then multiplying all inputs by a constant factor results in output increasing by a factor of
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4 marks, −1MicroeconomicsProduction and returns to scaleReturns to scale and homogeneityEasyabout 1 min
CUET-PG 2024 Question 4: Production and returns to scale
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If Y = F(L, K) is a linear homogeneous production function, then multiplying all inputs by a constant factor a = 2 results in output increasing by a factor of (A) 2 (B) greater than 2 (C) less than 2 (D) 4
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What this question tests
This question is on Returns to scale and homogeneity, part of Production and returns to scale in Microeconomics.
How output changes when all inputs scale up, including Euler's theorem and the degree of homogeneity.
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