onsider the following production function: Q = 2K + 6L where K represents Capital, L represents Labour and Q represents output. Which of the following statements is correct? A. This production function exhibits decreasing returns to scale and the long run average cost line will be horizontal (i.e. have a slope of zero.) B. This production function exhibits constant returns to scale and the long run average cost line will be horizontal (i.e. have a slope of zero). C. This production function exhibits constant returns to scale and the long run average cost line will be upward sloping. D. This production function exhibits increasing returns to scale and the long run average cost line will be downward sloping. E. This production function exhibits increasing returns to scale and the long run average cost line will be upward sloping.
Consider the following production function: Q = 2K + 6L where K represents Capital, L represents Labour and Q represents output.
Which of the following statements is correct?
A. |
This production function exhibits decreasing returns to scale and the long run average cost line will be horizontal (i.e. have a slope of zero.) |
|
B. |
This production function exhibits constant returns to scale and the long run average cost line will be horizontal (i.e. have a slope of zero). |
|
C. |
This production function exhibits constant returns to scale and the long run average cost line will be upward sloping. |
|
D. |
This production function exhibits increasing returns to scale and the long run average cost line will be downward sloping. |
|
E. |
This production function exhibits increasing returns to scale and the long run average cost line will be upward sloping. |
Step by step
Solved in 2 steps