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Asked Mar 19, 2019
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4. Classify the following production functions as to their returns to scale. Do they
exhibit constant, increasing, or decreasing returns to scale? Show your proof.
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4. Classify the following production functions as to their returns to scale. Do they exhibit constant, increasing, or decreasing returns to scale? Show your proof.

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Step 1

Production technologies or production function defines a relationship between the output and inputs. For example, a production function/ technology Q=F (L, K) defines a function F that gives the output (Q) that could be achieved with the given technology using labor (L) and capital (K) as inputs.

Step 2

Returns to scale is used to describe the changes in output when all inputs are varied in the long run. Returns to scale can be increasing, decreasing or constant.

Step 3

We find out the effect of multiplying inputs by a consta...

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