1. Define the concept of constant returns to scale. 2. Why does it make economic sense to assume that the production function exhibits constant returns to scale. Why does it make economic sense to assume that the production function exhibits positive returns to capital? 3. Define the concept of diminishing marginal returns to labor. Why does it make economic sense to assume that the production function exhibits diminishing marginal returns to labor?
1. Define the concept of constant returns to scale. 2. Why does it make economic sense to assume that the production function exhibits constant returns to scale. Why does it make economic sense to assume that the production function exhibits positive returns to capital? 3. Define the concept of diminishing marginal returns to labor. Why does it make economic sense to assume that the production function exhibits diminishing marginal returns to labor?
Chapter1: Making Economics Decisions
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Transcribed Image Text:1. Define the concept of constant returns to scale.
2. Why does it make economic sense to assume that the production function exhibits constant
returns to scale. Why does it make economic sense to assume that the production function
exhibits positive returns to capital?
3. Define the concept of diminishing marginal returns to labor. Why does it make economic
sense to assume that the production function exhibits diminishing marginal returns to
labor?
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