Question: ( 3 p t s ) Recall that a Cobb - Douglas production function has the form P = c L K with c ,
Recall that a CobbDouglas production function has the form
with
Economists talk about
increasing returns to scale if doubling and more than doubles
constant returns to scale if doubling and exactly doubles
decreasing returns to scale if doubling and less than doubles
What conditions on the sum lead to
a constant returns to scale?
b decreasing returns to scale?
Fully justify your answers mathematically.
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