If bread is produced by using a constant returns to scale production function, then if the:

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BlackTom AI · Accepted Answer

When analyzing returns to scale, we examine how output changes as all inputs are scaled together. Here, the production function for bread is said to exhibit constant returns to scale.
Option a: Doubling only the number of workers while not changing the equipment does not test scaling all inputs. With only one input doubled, the change in output is not defined by constant returns to scale, and in typical analysis this would imply a partial scaling, which is not the assumption.
Option b: Doubling only the amount of equipment similarly fails to vary all inputs together. Since constant returns to scale refer to proportional changes in all inputs, changing a single input while holding others fixed does not demonstrate the CRTS property and hence is not the right characterization.
Option c: Doubling both the amounts of equipment and workers means all inputs are scaled by the same factor (2x). Under constant returns to scale, if inputs double, output also doubles. Therefore, twice as much bread would be produced, perfectly matching the CRTS implication.
Option d: Doubling both inputs would imply quadruple output only under increasing returns to scale, where output rises by more than the input scale factor. Since the function is specified as constant returns to scale, quadrupling output is inconsistent with CRTS and incorrect for this scenario.
In summary, the key idea is that constant returns to scale implies proportional increases in output whenever all inputs are scaled by the same factor, which is exactly what happens in option c when both equipment and workers are doubled.

BU.220.610.51.FA25 M8 Final Comprehensive Exam - Multiple Choice Questions- Requires Respondus LockDown Browser

If bread is produced by using a constant returns to scale production function, then if the:

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BU.220.610.51.FA25 M8 Final Comprehensive Exam - Multiple Choice Questions- Requires Respondus LockDown Browser

If bread is produced by using a constant returns to scale production function, then if the:

查看解析

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