Question

Long-run production function is related to ______.

Options

• Law of returns to scale

• Law of variable proportion

• Law of demand

• None of these

Answer 1

Long-run production function is related to law of returns to scale.

Explanation:

The long run is a time horizon extensive enough that a firm can modify all of its inputs. Because there are no fixed factors of production, any expansion involves changing the overall size or scale of operations. The relationship between a proportionate change in all inputs and the resulting change in output is governed exclusively by the Law of Returns to Scale.