When labor is doubled and capital is tripled, a firm's output increases 2.5 times. Which of the following is true? O We need more information to determine the degree of returns to scale of this firm's production function. This firm's production function must exhibit increasing returns to scale. This firm's production function must exhibit decreasing returns to scale. This firm's production function must exhibit constant returns to scale.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.8P
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When labor is doubled and capital is tripled, a firm's output increases 2.5
times. Which of the following is true?
We need more information to determine the degree of returns to scale of this
firm's production function.
This firm's production function must exhibit increasing returns to scale.
This firm's production function must exhibit decreasing returns to scale.
This firm's production function must exhibit constant returns to scale.
Transcribed Image Text:When labor is doubled and capital is tripled, a firm's output increases 2.5 times. Which of the following is true? We need more information to determine the degree of returns to scale of this firm's production function. This firm's production function must exhibit increasing returns to scale. This firm's production function must exhibit decreasing returns to scale. This firm's production function must exhibit constant returns to scale.
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