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Does the Production Function Q = min(K,4L) have increasing, constant or decreasing returns to scale?

Does the Production Function Q = min(K,4L) have increasing, constant or decreasing returns to scale?

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Answer #1

Q = min(K, 4L)

This is a fixed-proportion production function where L and K are complements. For every 1 unit of capital, 4 units of labor are used. This proportion remains fixed for the production process. Therefore,

When 1 unit of K is used, 4 units of L are used.

When 2 units of K are used, (2 x 4) = 8 units of L are used.

When 4 units of K are used, (4 x 4) = 16 units of L are used.

The fixed proportion of usage of L and K signifies that when both inputs are increased N times, output will increase by exactly N times. exhibiting constant returns to scale.

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