Does This Production Function,q = 10L⁰

question 123

Multiple Choice

Does this production function,q = 10L^0.5K^0.3,experience increasing,decreasing or constant returns to scale?

• A) Decreasing because a 100% increase in inputs increases outputs by 80%.
• B) Increasing because an 80% increase in inputs increases outputs by 100%.
• C) Decreasing because 0.5 + 0.3 < 1.
• D) A and C.

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Definitions:

Low Income Levels

describe the economic condition where individuals or households earn less than the median income of a specific geographic area, often leading to limited access to basic needs and services.

Corporate Profits Tax

A tax imposed on the net income of corporations.

Long-Run Equilibrium

A state where all factors of production are variable, allowing firms to make adjustments, resulting in the economy or industry operating at its full capacity.

Noncorporate Sector

The part of an economy that involves the production of goods and services by individuals and organizations which are not incorporated as companies.