The Production Function Feature Called "Constant Returns to Scale" Means

question 30

Multiple Choice

The production function feature called "constant returns to scale" means that if we:

• A).multiply capital by z
• And labor by z , we multiply output by z .
• 1 2 3
• B)increase capital and labor by 10 percent each, we increase output by 10 percent.
• C)increase capital and labor by 5 percent each, we increase output by 10 percent.
• D)increase capital by 10 percent and increase labor by 5 percent, we increase output by 7.5 percent.