Question 4 (5 points) Q K L 100 3 6 200 5 10 300 7.5 15 400 10 20 500 12.5 25 600 15 30 The table in the above figure shows the levels of output resulting from different levels of inputs. Which of the following conclusions can be drawn from this information? A) Increasing returns to scale exist between 100 and 200 units of output. B) Constant returns to scale exist throughout all levels of production. C) Labor is subject to diminishing marginal productivity in the short run. D) No firm conclusions can be drawn.
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We have three inputs (Q, K, L) and the output is represented by the values in the table. We need to determine if there are increasing, constant, or decreasing returns to scale. Returns to scale refer to how much output changes when all inputs are increased Show more…
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