I. Increasing returns to scale in production means A) more than 10% as much of a
ID: 1124320 • Letter: I
Question
I. Increasing returns to scale in production means A) more than 10% as much of all inputs are required to increase output 1000. B) less than 3 times as much of all inputs are required to increase output 3 times C) more than twice as much of only one input is required to double output D) isoquants must be linear. II. Another farmer uses M units of machinery and L hours of labor to produce S tons of soybeans, with the following prodJKtion fur ction S S0(21. 12M 0 YS Itus producti function«xhibus A) decreasing returns to scale for all output levels B) constant returns to scale for all output levels. g returns to scale for all output levels. D) no clear pattern of returns to scale.Explanation / Answer
1> B is true
Reason
In increasing returns, if inputs are increased in some ratio, then the output will increase in a higher ratio.
2> A
Reason
It is decreasing return to scale as - if we double both the inputs, the output will increase 2^0.75 times, thus it is decreasing return,.