Suppose the production function for good q is given by q=3 ∙K+2∙ L where K and L are capital and labor inputs. Consider three statements about this function: I. The function exhibits constant returns to scale II. The function exhibits diminishing marginal productivities to all inputs III. The function has a constant marginal rate of technical substitution
Suppose the production function for good q is given by q=3 ∙K+2∙ L where K and L are capital and labor inputs. Consider three statements about this function: I. The function exhibits constant returns to scale II. The function exhibits diminishing marginal productivities to all inputs III. The function has a constant marginal rate of technical substitution
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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8) Suppose the production function for good q is given by q=3 ∙K+2∙ L where K and L
are capital and labor inputs. Consider three statements about this function:
I. The function exhibits constant returns to scale
II. The function exhibits diminishing marginal productivities to all inputs
III. The function has a constant marginal rate of technical substitution
Which of these statements are true?
A) All of them
B) None of them
C) I and II but not III
D) I and III but not II
E) Only I .
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