Consider the Production Function $Q = \left[ c + a L ^ { \frac { \sigma - 1 } { \sigma } } + b K ^ { \frac { \sigma - 1 } { \sigma } } \right] ^ { \frac { s } { \sigma - 1 } }$

question 39

Multiple Choice

Consider the production function $Q = \left[ c + a L ^ { \frac { \sigma - 1 } { \sigma } } + b K ^ { \frac { \sigma - 1 } { \sigma } } \right] ^ { \frac { s } { \sigma - 1 } }$
where $C$ is some constant different than zero. This production function exhibits

• A) decreasing returns to scale.
• B) constant returns to scale.
• C) increasing returns to scale.
• D) either decreasing or constant returns to scale, but more information is needed to determine which one.

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