Q: For which of the following business processes is a log function particularly useful in modeling the output?
or
Q: Which of the following business processes benefits most from the usage of a log function to represent the output?
- A process that exhibits a constant growth rate
- A process that exhibits diminishing returns to scale
- A process that is increasing at a constant rate
- A process that exhibits seasonality
Explanation: In such processes, the log function can effectively capture the relationship where increases in input lead to progressively smaller increases in output, reflecting diminishing returns. This makes log functions suitable for representing situations where growth slows down as the scale of production or input increases.
