For each of the following functions, describe returns to scale
a. Q = K + L
b. Q = K1/2L3/4
c. Q = K2L
a. Constant returns to scale.
b. Decreasing returns to scale.
c. Increasing returns to scale.
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Ceteris paribus, which of the following will occur if the Fed buys bonds through open-market operations?
A. The aggregate supply curve should shift leftward. B. The aggregate supply curve should shift rightward. C. The aggregate demand curve should shift leftward. D. The aggregate demand curve should shift rightward.
"Demand-side fiscal policy is capable of changing Real GDP." This statement would be most likely to be said by an economist who believes that
A) the AS curve is vertical. B) the AS curve is upward sloping. C) complete crowding out exists. D) there is little, if any, crowding out. E) b and d
Refer to the figure below. If box A represents households, B the product market, and C businesses, then flow (2) and flow (4) would represent:
A. Resources
B. Goods and services
C. Revenues
D. Money incomes
Under an exchange-rate targeting rule for monetary policy, a crawling peg
A) fixes the value of the domestic currency to a commodity such as gold. B) fixes the value of the domestic currency to that of a large, low-inflation country. C) allows the domestic currency to depreciate at a steady rate so that inflation in the pegging country can be higher than that of the anchor country. D) allows the domestic currency to depreciate at a steady rate so that inflation in the pegging country can be lower than that of the anchor country.