The Assumption of Constant Returns to Scale Suggests That If

question 6

Multiple Choice

The assumption of constant returns to scale suggests that if N and K both decrease by 7%:

• A) Y will decrease by exactly 7%.
• B) The capital- labour ratio (K/N) will decrease.
• C) Y will decrease by less than 7%.
• D) Y will decrease by more than 7%.
• E) The capital- labour ratio (K/N) will increase.

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Definitions:

Libido

in psychoanalytic theory, refers to the sexual drive or desire that is a primary source of motivation for human behavior according to Freud.

Gonads

The reproductive organs in animals and humans that produce gametes; in males, these are the testes, and in females, the ovaries.

Sexual Fantasies

Imagined or daydreamed sexual scenarios that an individual finds arousing or pleasurable.

Controversial

Pertaining to issues or subjects that provoke public disagreement or debate due to differing opinions and beliefs.