# Analyzing Given Production Functions

Determine whether the following production functions exhibit constant, increasing, or decreasing returns to scale.

A. Q = 0.6L + 20K +10F

B. Q = 2L2 + 3LK + 5K2

C. Q = 20L0.25K0.70

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#### Solution Preview

A. Q = 0.6L + 20K +10F

Let L=100, K=100 and F=100 at initial point.

Q1=0.6*100+20*100+10*100=3060

Suppose all inputs are raised by 2%

i.e. L=102, K=102, F=102

Q2=0.6*102+20*102+10*102=3121.2

Percentage change in output=(Q2-Q1)/Q1=(3121.2-3060)/3060=2%

In this case, output has increased in the same proportion as that of inputs. We ...

#### Solution Summary

This solution depicts the required steps needed to check if the given functions exhibit increasing, decreasing or constant returns to scale. All work is clearly shown.

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