In the long run, production function can display _________.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → All of the above
In the long run all inputs can be raised in the same proportion. Output may then rise by the same, a larger or a smaller proportion, so a production function can show any of the three returns to scale.
Option (1) Constant returns to scale — Correct statement, but it is only one of the correct points, so on its own it is not the answer.
Option (2) Increasing returns to scale — Correct statement, but it is only one of the correct points, so on its own it is not the answer.
Option (3) Decreasing returns to scale — Correct statement, but it is only one of the correct points, so on its own it is not the answer.
NCERT (2026-27): “3.6 Returns to Scale … One special case in the long run occurs when both factors are increased by the same proportion, or factors are scaled up. When a proportional increase in all inputs results in an increase in output by the same proportion, the production function is said to display Constant returns to scale (CRS). When a proportional increase in all inputs results in an increase in output by a larger proportion, the production function is said to display Increasing Returns to Scale (IRS) Decreasing Returns to Scale (DRS) holds when a proportional increase in all inputs results in an increase in output by a smaller proportion.” |