What is the correct answer?


If Cobb-Douglas production function is homogeneous of degree greater than one (n>1), then it shows:

A. Constant returns to scale

B. Increasing returns to scale

C. Decreasing returns to scale

D. None of the above

Correct Answer :

B. Increasing returns to scale

The increasing returns to scale means if we doubled the inputs, the output will more than doubled.}

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