Consider the Aggregate Production Function Y = F(K, L)

question 4

Multiple Choice

Consider the aggregate production function Y = F(K, L) . If the inputs K and L are increased by 5 percent each, and the production function displays constant returns to scale, then total output will increase by percent.

• A)5
• B)more than 5
• C)less than 5
• D)0
• E)-- not enough information to determine

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Reg.§1.162-1

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