The production function y = 0.8X1X2 exhibitsreturns to scale.O ConstantO IncreasingO DecreasingO Homothetic

y=0.8X1X2Now, Substitute X1=2X1 and X2=2X2Thus,y=0.8(2X1)(2X2)y=0.8*4*X1X2y=4*0.8X1X2y=4(y) ....…

Answered: The production function y = 0.8X1X2…

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The production function y = 0.8X1X2 exhibits returns to scale. Constant Increasing Decreasing O Homothetic

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 27RQ: What is the difference between economies of scale, constant returns to scale, and diseconomies of...

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Question

The production function y = 0.8X1X2 exhibits
returns to scale.
O Constant
O Increasing
O Decreasing
O Homothetic

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