A Firm Has a Production Function F(x, Y)= 0

question 14

Multiple Choice

A firm has a production function f(x, y) = 0.70(x^0.80 + y^0.80) ² whenever x > 0 and y > 0.When the amounts of both inputs are positive, this firm has

• A)increasing returns to scale if x + y >1 and decreasing returns to scale otherwise.
• B)increasing returns to scale.
• C)decreasing returns to scale.
• D)constant returns to scale.
• E)increasing returns to scale if output is less than 1 and decreasing returns to scale if output is greater than 1.

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Definitions:

Laissez Fair Capitalism

An economic system where private parties are free from government intervention in their economic decisions.