If all inputs are increased in the same proportion, than it is the case of 1. short-run production function 2. long-run production function 3. laws of variable proportion 4. laws of returns to scale Select the correct answer

Both 1 and 2
Both 2 and 3
Both 1 and 4
Both 2 and 4

The correct answer is: Both 2 and 4.

A production function is a mathematical relationship that describes the maximum amount of output that can be produced from a given set of inputs. In the short run, at least one input is fixed, while in the long run all inputs are variable.

The law of variable proportions states that, in the short run, as one input is increased while all other inputs are held constant, output will initially increase at an increasing rate, but eventually will increase at a decreasing rate. This is because, as more of the variable input is added, it becomes increasingly difficult to utilize the fixed input efficiently.

The law of returns to scale states that, in the long run, as all inputs are increased in the same proportion, output will increase in the same proportion. This is because, in the long run, all inputs can be varied, so there is no fixed input that can limit the productivity of the other inputs.

Therefore, if all inputs are increased in the same proportion, it is the case of a long-run production function and the law of returns to scale.

Exit mobile version