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constant returns

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The following Cobb-Douglas production function,

Q = 1.8L^0.74K^0.36 exhibits

A) increasing returns
B) constant returns
C) decreasing returns
D) both a and b

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Solution Summary

This solution shows constant returns.

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Q(L, K) = 1.8L^0.74K^0.36
Then for any s>1, we have
Q(sL, sK) = 1.8(sL)^0.74 (sK)^0.36 ...

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