Suppose the Production Function for Good Q Is Given by Q

question 14

Multiple Choice

Suppose the production function for good q is given by q = 3K + 2 L where K and L are capital and labour inputs. Consider three statements about this function: I. The function exhibits constant returns to scale.
II) The function exhibits diminishing marginal productivities to all inputs.
III) The function has a constant rate of technical substitution.
Which of these statements is true?

• A) All of them.
• B) Only I.
• C) I and II but not III.
• D) I and III but not II.

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Definitions:

Inventory

Goods or materials that a business holds for the purpose of selling them or turning them into products for sale.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income levels or financial transactions.

Non-controlling Interest

The portion of equity in a subsidiary not owned by the parent company, reflecting the interest of minority shareholders.

Subsidiary

A company controlled by another company, often referred to as the parent company.