A Production Function Exhibits Decreasing Returns to Scale If a Twofold

question 51

Essay

A production function exhibits decreasing returns to scale if a twofold (threefold,etc.)increase in all inputs increases output by less than twofold (less than threefold,etc.).For example,by doubling the use of capital and labor,the firm would less than double its output.
a.What would the average and marginal cost curves look like under decreasing returns to scale?

b.Give an example of a production function that exhibits decreasing returns to scale.

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Definitions:

Performance Objectives

Performance objectives are specific goals identified to measure the effectiveness and efficiency of an employee's job performance.

Output Standards

The pre-determined levels of performance or production that a process or system is expected to achieve.

Input Standards

Benchmarks or criteria used to measure the quantity, quality, or timeliness of resources used in a production process or project.

Critical Path

In project management, it is the longest sequence of tasks that must be finished on time for the whole project to be completed on schedule.