Which of the Following Production Functions Exhibit(s) Constant Returns to Scale

question 31

Multiple Choice

Which of the following production functions exhibit(s) constant returns to scale?
I. Q =
II. Q = 2K + L
III. Q = K^0.8L^0.2

• A) II and III
• B) I and II
• C) III
• D) I, II, and III

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Definitions:

Bid Price

The price a buyer is willing to pay for a good, service, or financial instrument.

Incremental Costs

Costs that change with the level of output or activity, directly associated with a specific business decision.

Product-Cost Distortions

When the allocated costs of producing a product do not accurately reflect the actual resources used, leading to misleading cost information.

Volume-Based

A pricing or costing approach where prices or costs are determined based on the quantity of goods or services produced or sold.