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If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of:
- a)Constant returns to scale.
- b)Increasing returns to scale.
- c)Decreasing returns to scale.
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
If one unit of labour and one unit of capital give 200 units of output...
Constant Returns to Scale
Explanation:
Constant Returns to Scale (CRS) refers to a production process where an increase in the scale of production results in a proportional increase in output. In other words, if inputs are increased by a certain percentage, output also increases by the same percentage.
In the given scenario, the production function exhibits CRS because:
- One unit of labour and one unit of capital give 200 units of output. If we double the inputs to two units of labour and two units of capital, the output also doubles to 400 units. This implies that the production process is scalable and output increases proportionally with inputs.
- Similarly, if we increase the inputs to five units of labour and five units of capital, the output also increases proportionally to 1000 units.
Therefore, the given production function exhibits constant returns to scale.
Conclusion:
In conclusion, constant returns to scale is a property of production functions where an increase in inputs results in a proportional increase in output. The production function described in the question exhibits this property, as doubling or tripling the inputs results in a proportional increase in output.
Explanation:
Constant Returns to Scale (CRS) refers to a production process where an increase in the scale of production results in a proportional increase in output. In other words, if inputs are increased by a certain percentage, output also increases by the same percentage.
In the given scenario, the production function exhibits CRS because:
- One unit of labour and one unit of capital give 200 units of output. If we double the inputs to two units of labour and two units of capital, the output also doubles to 400 units. This implies that the production process is scalable and output increases proportionally with inputs.
- Similarly, if we increase the inputs to five units of labour and five units of capital, the output also increases proportionally to 1000 units.
Therefore, the given production function exhibits constant returns to scale.
Conclusion:
In conclusion, constant returns to scale is a property of production functions where an increase in inputs results in a proportional increase in output. The production function described in the question exhibits this property, as doubling or tripling the inputs results in a proportional increase in output.
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Community Answer
If one unit of labour and one unit of capital give 200 units of output...
Here, if you'll look properly you'll see a constant pattern in which both the factors amd the output is increasing.
like
2 input = 200 output. (1:100)
4 input = 400 output. (1:100)
10input = 1000 output (1:100)
we can clearly see every time the input is increased by a unit the output is increased by its 100 times.
so it's constant return.
hope it helped :))
like
2 input = 200 output. (1:100)
4 input = 400 output. (1:100)
10input = 1000 output (1:100)
we can clearly see every time the input is increased by a unit the output is increased by its 100 times.
so it's constant return.
hope it helped :))
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If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of:a)Constant returns to scale.b)Increasing returns to scale.c)Decreasing returns to scale.d)None of these.Correct answer is option 'A'. Can you explain this answer?
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If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of:a)Constant returns to scale.b)Increasing returns to scale.c)Decreasing returns to scale.d)None of these.Correct answer is option 'A'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of:a)Constant returns to scale.b)Increasing returns to scale.c)Decreasing returns to scale.d)None of these.Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If one unit of labour and one unit of capital give 200 units of output, two units of labour and two units of capital give 400 units of output and 5 units of labour and five units of capital give 1000 units of output then this is a case of:a)Constant returns to scale.b)Increasing returns to scale.c)Decreasing returns to scale.d)None of these.Correct answer is option 'A'. Can you explain this answer?.
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