The Aggregate Production Function Shows the for Given Levels of Labour

question 26

Multiple Choice

The aggregate production function shows the for given levels of labour and capital inputs.

• A)returns to scale
• B)the production possibilities boundary
• C)marginal product of capital
• D)marginal product of labour
• E)total output for society (real GDP)

---

Definitions:

Utility Maximization

The process by which consumers adjust their consumption to achieve the highest level of satisfaction from their available resources.

Marginal Utility

The incremental pleasure or advantage obtained by consuming an extra unit of a good or service.

Price Ratio

The ratio or comparison between the prices of two different goods or services.

Diamond/Water Paradox

A paradox highlighting the contradiction between the high value of items with little utility (diamonds) and the low value of items with great utility (water), illustrating the difference between total and marginal utility.