Econ-Returns to scale

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Determine whether returns to scale is decreasing, increasing or constant:
Q = 2K + 3L + KL


Take a shot. Hint: increase both K and L by, say 10%. Does Q rise by more than 10% (increasing), less than 10% (decreasing), or exactly 10% (constant)

  • Econ-Returns to scale -

    Increasing returns to scale

  • Econ-Returns to scale -

    increasing

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