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Questions › JNU › JNU SSS 2010 › Q24
1 mark, −0.5Microeconomics › Production and returns to scale › Returns to scale and homogeneityModerateabout 1 min

JNU SSS 2010 Question 24: Production and returns to scale

A firm has a production function q=A⋅K0⋅5L1⋅8q = A \cdot K^{0\cdot5} L^{1\cdot8}q=A⋅K0⋅5L1⋅8, where AAA is a positive constant. Such a production function exhibits

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A firm has a production function q = A · K^(0·5) L^(1·8), where A is a positive constant. Such a production function exhibits (A) decreasing returns to scale and diminishing marginal product for factor K (B) increasing returns to scale and diminishing marginal product for factor K (C) decreasing returns to scale and increasing marginal product for factor K (D) constant returns to scale with increasing marginal product for factor L

Also written as: A firm has a production function q = A * K^(0*5) L^(1*8), where A is a positive constant. Such a production function exhibits

Production and returns to scale has come up 92 times in 6 exams since 2007.

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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Question from the JNU SSS 2010 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.