When does a production function satisfy decreasing returns to sca… - Vidyadip

Question

When does a production function satisfy decreasing returns to scale?

✓

Answer

Decreasing returns to scale (DRS) holds when a proportional increase in all the factors of production leads to an increase in the output by less than the proportion. For example, if both labour and capital are increased by 'n' times but the resultant increase in output is less than 'n' times, then we say that the production function exhibits DRS.
F (nL, nK) < n. f (L, K)

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "3 Marks Question" from Production and cost→Production and cost — all question types→Economics STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

Explain the meaning of 'minimum' price ceiling and its implications.

Giving reason comment on the shape of Production Possibilities curve based on the following schedule:

Good X (units)	Good Y (units)
0	8
1	6
2	4
3	2
4	0

What do you mean by a normal good?

How does the equilibrium price of a normal commodity change when income of its buyers falls? Explain the chain of effects.

A consumer buys 200 units of a good at a price of ₹ 20 per unit. Price elasticity of demand is (-) 2. At what price will he be willing to purchase 300 units? Calculate.

The price elasticity of supply of a commodity is $2.5$. At a price of $₹ 5$ per unit, its quantity supplied is $300$ units. Calculate its quantity supplied at a price of $₹ 4$ per unit.

Define PPC. Explain why it is downward sloping from left to right.

Write a budget line equation of a consumer if the two goods purchased by the consumer, Good X and Good Y are priced at $₹ 10$ and $₹ 5$ respectively and the consumer's income is $₹ 100$.

Give the meaning and characteristics of production possibility frontier.

Explain the differences between variable factors and fixed factors.