Consider a production function q = f (x_1, x_2) where the firm produces q amount of output using x_1 amount of factor 1 and x_2 amount of factor 2.…
CUET UG 2025 — Economics Micro
Consider a production function q=f(x1,x2) where the firm produces q amount of output using x1 amount of factor 1 and x2 amount of factor 2. Now suppose the firm decides to increase the employment level of both the factors t (t > 1) times.
Identify the correct statement from the following.
Held on 15 May 2025 · Verified 13 Jul 2026.
Options
- A
f(tx1,tx2)=tf(x1,x2) implies constant returns to scale.
- B
f(tx1,tx2)>tf(x1,x2) implies decreasing returns to scale.
- C
f(tx1,tx2)<tf(x1,x2) implies increasing returns to scale.
- D
f(tx1,tx2)=f(x1,x2) implies constant returns to scale.
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