An Aggregate Production Function Exhibits Constant Returns to Scale When

question 110

Multiple Choice

An aggregate production function exhibits constant returns to scale when a 1% increase in labour input

• A)produces a 1% increase in output.
• B)along with a 1% increase in capital produces the same amount of output.
• C)along with a 1% increase in capital produces 1% more output.
• D)along with a 1% decrease in capital produces the same amount of output.
• E)induces a 1% increase in capital input.

---

Definitions:

Standard Costs

Predetermined or estimated costs used to measure the performance of a company based on the efficient use of labor and materials.

Actual Costs

The realized expenses incurred in the production of goods or services, as distinguished from estimated costs or budgeted amounts.

Principle of Exceptions

A management principle focusing on the identification and handling of cases that deviate from the norm.

Labor Rates

The amount paid to workers for their services, usually expressed on an hourly basis.