True or False with explanation (explanation determines credit). Why is TRUE? Suppose a production function utilizes both
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Question:
True or False with explanation (explanation determines credit).
Why is TRUE?
Suppose a production function utilizes both capital (K) and labor (L) as inputs.For this production function, an increase in L (holding K constant) leads to an exact proportional increase in output.That is, for instance, increasing L by a factor of two yields twice as much output.Then, this production function must display increasing returns to scale.
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