Question

Under what conditions does a​ Cobb-Douglas production​ function,

Answer 1

Answer:

Exhibits increasing returns to scale.

Explanation:

Given that,

Cobb-Douglas production​ function:

$q=10(L)^{0.71}(K)^{0.84}$

If both inputs are doubled, then

$q=10(2L)^{0.71}(2K)^{0.84}$

$q=10(2)^{(0.71+0.84)}(L)^{0.71}(K)^{0.84}$

$q=10(2)^{1.55}(L)^{0.71}(K)^{0.84}$

Therefore, this Cobb-Douglas production​ function exhibits the increasing returns to scale because the power of 2 is greater than 1. Under the condition of increasing returns to scale, an increase in the output of the firm is greater than the increase in the input of the firm.