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Question

If the output elasticities of all inputs used by a firm are summed together, then the total


A

will be greater than one if returns to scale are decreasing

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B

will be equal to one if returns to scale are constant

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C

will be less than one if returns to scale are increasing

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D

All of the above are correct.

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Solution

The correct option is B

will be equal to one if returns to scale are constant


If the output elasticities of all inputs used by a firm are summed together, then the total will be equal to one if returns to scale are constant.


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