Consider the production function f(x1,x2) =X²,X². Does this exhibit

Question

constant, increasing, or decreasing returns to scale? With reasons

Answer 1

This production function exhibits constant returns to scale. This is because when both inputs (x1 and x2) are increased by the same proportion, the output (X²,X²) is also increased by the same proportion. This indicates that the production function is operating under constant returns to scale.