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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 Preview

    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 ...

    Solution Summary

    This solution shows constant returns.