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Constant returns for a Cobb-Douglas production function with two inputs Suppose that the production function is f(x1, x2)=Cxa1xb2, where a,b,C are...

1. Constant returns for a Cobb-Douglas production function with two inputs

Suppose that the production function is f(x1, x2)=Cxa1xb2, where a,b,C are positive constants.
a. For what positive values of a,b, and C are there decreasing returns to scale?

b. Constant returns to scale?

C. Increasing returns to scale?

Which answers would u choose?

All C>0 and a+b=1
All C>1 and a+b=1
All C>0 and ab<1
All C>0 and a+b<1
All C>0 and a+b>0
All C>0 and a+b>1
All C>1 and a+b>1

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CH250410_481826_ECO.doc

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1. Constant returns for a Cobb-Douglas production function with two inputs
Suppose that the production function is f(x1, x2)=Cxa1xb2, where a,b,C are positive...

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