The production function Q = 50K^0.25L^0.25 exhibits A. increasing returns to scale. B. constant returns to scale. C. decreasing returns to scale. Answer D. increasing, then diminishing returns to scale. E. negative returns to scale.
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25L^0.25 exhibits decreasing returns to scale because when we increase both K and L by a factor x, the output only increases by x^(0.5), which is less than the increase in inputs. Show more…
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