Draw two production sets: one that violates irreversibility and one that satisfies this property.

Exercise 5.8.]: Draw two production sets: one that violates irreversibility and one that satises this property. (vii) Maniac-reusing returns to scale. The production technology 1' exhibits noninereasing returns to scale il'for any y e Y, we have at y e onr all scalars at e [0, i]. In words. any feasible input output vector can be scaled down (see Figure 5.3.5). Note that nonincreasing returns to scale imply that inaction is possible [property (it'll (viii) Manda-reusing returns to scale. In contrast with the previous case, the production process exhibits nondecreasing returns to scale if for any y e 1", we have ay 6 Y [or any scale at 2 t. In words, any feasible inputoutput vector can be scaled up. Figure 5.8.6(a) presents a typical example; in the gure. units of output (good 2) can be produced at a constant cost of input (good 1) except that in order to produce at all. a xed setup cost is required. lt does not matter for the existence of nondecreasing returns if this xed cost is sunk [as in Figure 5.8.6(b)] or not [as in Figure S.B.6(a). where inaction is possible]. (ix) Constant returns to scale. This property is the conjunction of properties (vii) and (viii). The production set Y exhibits constant returns to scale if y E Y implies aye Y for any scalar a 2 0. Geometrically, Y is a cone (see Figure 5.3.7)