6. The production function at Weedy's Grainery is Q = L¹4K¹/². If Weedy increases the scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and 4 units of capital, how much does output expand? Does the firm exhibit increasing, decreasing or constant returns to scale? a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to scale. b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to scale. c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale. d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to scale.
6. The production function at Weedy's Grainery is Q = L¹4K¹/². If Weedy increases the scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and 4 units of capital, how much does output expand? Does the firm exhibit increasing, decreasing or constant returns to scale? a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to scale. b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to scale. c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale. d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to scale.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:6. The production function at Weedy's Grainery is Q=L¹/4K¹/2. If Weedy increases the
scale of his operation from 16 units of labor and 1 unit of capital to 81 units of labor and
4 units of capital, how much does output expand? Does the firm exhibit increasing,
decreasing or constant returns to scale?
a. Output increases from Q=4 to Q= 36. The firm exhibits increasing returns to
scale.
b. Output increases from Q=4 to Q= 36. The firm exhibits diminishing returns to
scale.
c. Output increases from Q=2 to Q= 6. This firm exhibits increasing returns to scale.
d. Output increases from Q=2 to Q= 6. This firm exhibits diminishing returns to
scale.
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