The production function Y = AK?L1-? exhibits
a. constant returns to scale.
b. diminishing marginal returns to scale.
c. increasing returns to scale.
d. decreasing returns to scale.
e. both a and b.
E
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In the foreign exchange market, as the U.S. exchange rate rises, other things remaining the same, the
A) quantity of dollars demanded decreases. B) demand curve for dollars shifts rightward. C) demand curve for dollars shifts leftward. D) supply curve of dollars shifts rightward. E) quantity of dollars demanded increases.
To maximize its revenue
A) a firm facing inelastic demand should always raise its price. B) a firm facing elastic demand should always raise its price. C) a firm should always charge the highest price possible regardless of the elasticity of demand. D) None of the above answers is correct.
Income elasticity of demand describes how change in income affects the quantity demanded of a good.
Answer the following statement true (T) or false (F)
The higher the marginal propensity to consume, the
a. smaller the size of the multiplier. b. larger the size of the multiplier. c. larger the propensity to save. d. larger the velocity.