Suppose a production function is given by: 1 2 Q = 4 L³K³ where I is labour inputs and K capital inputs. What would happen to output if both inputs are increased by 50%? Does this production function exhibit increasing returns to scale?

Suppose a production function is given by: 1 2 Q = 4 L³K³ where I is labour inputs and K capital inputs. What would happen to output if both inputs are increased by 50%? Does this production function exhibit increasing returns to scale?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 7E

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Question

Suppose a
production function is given by:
12
Q = 4 L³K³
where I is labour inputs and K capital inputs. What would happen to output if both inputs
are increased by 50%? Does this production function exhibit increasing returns to scale?

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