Question

both capital and labor​ double, given the production​ function, output will double . If output doubles when inputs​ double, the production function will be characterized by​ ________.

Answer 1

Answer:

If output doubles when inputs​ double, the production function will be characterized by​ a constant returns to scale.

Explanation:

In economics, returns to scale refers to a long run situation that reveals to the proportionate change in output when capital and labor inputs become variable or change.

The three possible types of returns to scale are as follows:

1. Increasing returns to scale: This occurs when the proportionate change in output is greater than the proportionate change in capital and labor inputs.

2. Decreasing returns to scale: This occurs when the proportionate change in output is less than the proportionate change in capital and labor inputs.

3. Constant returns to scale: This occurs when the proportionate change in output is the same as the proportionate change in capital and labor inputs.

Based on the above explanation therefore, if output doubles when inputs​ double, the production function will be characterized by​ a constant returns to scale. This is because the the proportionate change (double) in output is the sames as the proportionate change (double) in inputs.