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Question
If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of _____________________.
If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of _____________________.
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Solution
The correct option is A Constant Returns to Scale.
If
one unit of labour and one unit of capital give 200 units of output,
two units of labour and two units of capital give 400 units of output
and 5 units of labour and five units of capital give 1000 units of
output then this is a case of Constant Returns to Scale.Constant Returns to Scale can be defined as a situation when an increase in inputs cause proportional increase in output.
If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of Constant Returns to Scale.Constant Returns to Scale can be defined as a situation when an increase in inputs cause proportional increase in output.
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