Multiple Choice
A firm has a production function f(x, y) = 1.80(x0.80 + y0.80) 2 whenever x > 0 and y > 0. When the amounts of both inputs are positive, this firm has
A) decreasing returns to scale.
B) constant returns to scale.
C) increasing returns to scale if x + y > 1 and decreasing returns to scale otherwise.
D) increasing returns to scale.
E) increasing returns to scale if output is less than 1 and decreasing returns to scale if output is greater than 1.
Correct Answer:

Verified
Correct Answer:
Verified
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