Returns to Scale

Question 1

technology set Y is said to exhibit nonincreasing returns to scale if.

Answer 1

for any y in Y and any 0 < α < 1 the plan αy is in Y .

Question 2

Decreasing returns to scale occur.

Answer 2

when outputs increase slower in relation to growth of used inputs f(az) < af(z)

Question 3

Constant returns to scale occur

Answer 3

when outputs increase proportionally to growth of used inputs

Question 4

Non- increasing returns to scale occur

Answer 4

when outputs increase slower or proportionally to used inputs.

Question 5

Increasing returns to scale is when

Answer 5

outputs increase by a greater proportion than inputs

Question 6

if the technology set exhibits constant returns to scale then it
exhibits

Answer 6

both nonincreasing and nondecreasing returns to scale.

Question 7

additive set is a set Y of elements for which the sum of any two elements in Y is also an element of Y. This means that

Answer 7

if y and y’ are in Y, then their sum y + y’ is also in Y.

Question 8

Formally, we say that a set Y is a convex cone if it satisfies the following two properties:

Answer 8

For any y and y’ in Y and any non-negative scalars α and α’, the linear combination αy + α’y’ is also in Y.

For any y in Y and any non-negative scalar α, the scalar multiple αy is also in Y.