The figure below displays two level curves from a fırm's production function. Assume that the marginal product of labor (L) and the marginal product of capital (K) are always positive. The bundle (L = 2, K = 2) falls on the q = 1 level curve (i.e. all bundles on the curve result in one unit of output). The bundle (L = 4, K = 3) falls on the q = 2 level curve. Which statement below is true? K 3 q = 2 q = 1 2 L (Note: if no image appears above, click here e) There is not enough information available to say which of the above statements is true The production function exhibits increasing returns to scale The production function exhibits constant returns to scale The production function exhibits decreasing returns to scale
The figure below displays two level curves from a fırm's production function. Assume that the marginal product of labor (L) and the marginal product of capital (K) are always positive. The bundle (L = 2, K = 2) falls on the q = 1 level curve (i.e. all bundles on the curve result in one unit of output). The bundle (L = 4, K = 3) falls on the q = 2 level curve. Which statement below is true? K 3 q = 2 q = 1 2 L (Note: if no image appears above, click here e) There is not enough information available to say which of the above statements is true The production function exhibits increasing returns to scale The production function exhibits constant returns to scale The production function exhibits decreasing returns to scale
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.10P
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Transcribed Image Text:The figure below displays two level curves from a fırm's production
function. Assume that the marginal product of labor (L) and the marginal
product of capital (K) are always positive. The bundle (L = 2, K = 2)
falls on the q = 1 level curve (i.e. all bundles on the curve result in one
unit of output). The bundle (L = 4, K = 3) falls on the q = 2 level
curve. Which statement below is true?
K
3
q = 2
q = 1
2
L
(Note: if no image appears above, click here e)
There is not enough information available to say which of the above
statements is true
The production function exhibits increasing returns to scale
The production function exhibits constant returns to scale
The production function exhibits decreasing returns to scale
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