Suppose That an Economy with Constant Returns to Scale Doubled

question 120

Multiple Choice

Suppose that an economy with constant returns to scale doubled its physical capital stock, doubled its available natural resources, and doubled its human capital, but kept the size of the labour force the same. How does the change in output compare to the change in productivity?

• A) Output would stay the same and so would its productivity.
• B) Output and productivity would increase, but by less than double.
• C) Output and productivity would increase by more than double.
• D) Output would increase by less than double, but productivity would double.

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Definitions:

Fiduciary Duty

A legal obligation of one party to act in the best interest of another. Typically, a fiduciary is responsible for managing the assets of another person or of a group of people.

Secret Profit

Financial gain obtained secretly and unethically as a result of one's position or through the exploitation of confidential information.

Conflict of Interest

A situation where an individual's personal interests could improperly influence the performance of their duties or decision-making.

Dual Agency

A real estate transaction scenario in which a single agent or broker represents both the buyer and the seller, creating potential conflicts of interest.