Question

A farmer has been using 2 employees and 1 tractor to produce 1000 bags of maize. If the farmer increases the employees to 4 and the tractors to 2 what would be the nature of returns to scale if production rose to

(I) 2000 bags

(Ii) 500bags

(III) 3000 bags

Answer 1

i) constant returns to scale

ii) decreasing returns to scale

iii) decreasing returns to scale