The Main Properties of a Neoclassical Aggregate Production Function Are

question 98

Multiple Choice

The main properties of a Neoclassical aggregate production function are ________ when all factors are increased proportionally and ________ when any one factor is increased on its own.

• A)increasing returns to scale; diminishing marginal returns
• B)constant returns to scale; diminishing marginal returns
• C)constant returns to scale; constant marginal returns
• D)decreasing returns to scale; diminishing marginal returns
• E)increasing returns to scale; increasing marginal returns

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Definitions:

Average Total Cost

The total cost of production divided by the total output or quantity produced, indicating the cost per unit of output.

Average Fixed Cost

The fixed costs of production (costs that do not change with the amount of output) divided by the quantity of output produced.

Profit-Maximizing Monopolist

A monopolist who adjusts the price or quantity of the product to maximize profit, considering the market's demand curve.

Equilibrium

A state in economic models where supply equals demand, leading to a stable market price and quantity.