When does a production function satisfy decreasing returns to scale?
Decreasing returns to scale (DRS) holds when a proportional increase in all the factors of production leads to an increase in the output by less than the proportion. For example, if both labour and capital are increased by ‘n’ times but the resultant increase in output is less than ‘n’ times, then we say that the production function exhibits
DRS.
F (nL, nK) < n. f (L, K)
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Welcome to the NCERT Solutions for Class 12 Micro Economics - Chapter . This page offers a step-by-step solution to the specific question from Excercise 1 , Question 11: When does a production function satisfy decreasing returns to scale? ....
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