Constant returnfs to scale (CRS) is a property of production function that holds when_________.

Correct option is C

The Correct Answer is: (c) a proportional increase in all inputs results in an increase in output by the same proportion

Constant Returns to Scale (CRS) is a property of a production function where a proportional increase in all inputs results in an increase in output by the same proportion.

Information Booster:

• If inputs are scaled up by a factor $k$, the output also increases by the same factor $k$.
• Mathematically, if the production function is $Q=f(L,K)$, then for CRS:$$f(kL,kK)=k\cdot f(L,K)$$where $L$ is labor, $K$ is capital, and $k$ is the scaling factor.

This property indicates that the production process is neither inefficient nor overly efficient in scaling inputs to outputs.

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