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The table below represents the production function for a small catering company specializing in barbecued pork. The numbers in each cell represent the number of
The table below represents the production function for a small catering company specializing in barbecued pork. The numbers in each cell represent the number of customers that can be served with various combinations of labour and capital. Labour (L) 0 1 2 3 4 5 6 100 132 155 174 190 Capital 205 (K) 2 152 200 235 264 289 310 3 193 255 300 337 368 396 4 230 303 357 400 437 470 5 263 347 408 457 500 538 6 293 387 455 510 558 600 Suppose the level of capital is fixed at four units and the firm is employing one unit of labour. Which of the following statements is true? O A. The production function does not satisfy the principle of diminishing marginal returns at this level of capital O B. The production function does satisfy the principle of diminishing marginal returns at this level of capital O C. We cannot say whether the principle of diminishing marginal returns is satisfied or not at this level of capital. O D. There are increasing returns to scale when K = 3 and L = 1
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