The Production Function Feature Called "Constant Returns to Scale" Means

Multiple Choice

The production function feature called "constant returns to scale" means that if we:

A) multiply capital by z₁ and labor by z₂, we multiply output by z₃.
B) increase capital and labor by 10 percent each, we increase output by 10 percent.
C) increase capital and labor by 5 percent each, we increase output by 10 percent.
D) increase capital by 10 percent and increase labor by 5 percent, we increase output by 7.5 percent.