Which of the Following Production Functions Exhibit Constant Returns to Scale

question 47

Multiple Choice

Which of the following production functions exhibit constant returns to scale? In each case y is output and K and L are inputs. (1) y = . (2) y = 3 . (3) y = . (4) y = 2K + 3L.

• A) 1, 2, and 4
• B) 2, 3, and 4
• C) 1, 3, and 4
• D) 2 and 3
• E) 2 and 4

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Definitions:

Profit-Oriented

A business approach or objective focusing on generating financial gain and maximizing profit margins.

Competition-Oriented

A strategic approach focused on analyzing and reacting to the actions of competitors.

Demand-Oriented

An approach where pricing, production, and marketing decisions are based on consumer demand and preferences.

Predatory Pricing

A pricing strategy where a product or service is set at a very low price with the intent of driving competitors out of the market or creating barriers to entry for potential new entrants.