Multiple Choice
A firm has the production function f(x1, x2) = (xb1 + xb2) c, where b > 0 and c > 0. This firm will have
A) Increasing returns to scale if and only if 2b + c > 1.
B) Increasing returns to scale if and only if bc > 1.
C) Increasing returns to scale if and only if b + c > 1.
D) Constant returns to scale if and only if c = 1.
Correct Answer:
Verified
Correct Answer:
Verified
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