Increasing returns to scale production technologies cannot give rise to convex producer choice sets.
Answer the following statement true (T) or false (F)
True
Rationale: If the production frontier has increasing returns to scale, then the vertical slice along any ray from the origin must get steeper -- implying the area underneath is non-convex.
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Employees at the university have negotiated a 5 percent increase in wages for the next year, based on their inflation expectations. If inflation is actually 4 percent over the next year, which of the following will occur?
A) Unemployment of university employees will fall. B) The decrease in inflation is expected. C) Real wages for university employees will rise. D) Inflation will be 5 percent the following year.
Refer to Figure 14.1. Other things equal, an increase in government spending on infrastructure projects is best represented as a movement from
A) point X to point Y. B) point Z to point X. C) point Z to point Y. D) point Y to point X.
People prefer to hold less of their wealth in the form of financial assets like bonds and term deposits when: a. real GDP is at an all-time low
b. the real interest rate is above 10 percent. c. the price level is very low. d. the nominal interest rate is close to zero. e. the nominal interest rate is very high.
"The minimum wage should be increased so that low-income workers can afford to feed their families." This is an example of: a. a positive economic statement
b. a negative economic statement. c. the fallacy of composition. d. a normative economic statement.