Question

Which of the following is an example of constant returns to scale?

Options

• Inputs increase by 50%; output increases by 70%

• Inputs increase by 100%; output increases by 100%

• Inputs remain the same; output increases

• Inputs increase by 100%, output increases by 50%

Answer 1

Inputs increase by 100%; output increases by 100%

Explanation:

Constant returns to scale mean output changes exactly in the same proportion as inputs.