With a Cubic Production Function of the Form $Q = a K ^ { 3 } L ^ { 3 } + b K ^ { 2 } L ^ { 2 }$

question 21

Multiple Choice

With a cubic production function of the form $Q = a K ^ { 3 } L ^ { 3 } + b K ^ { 2 } L ^ { 2 }$ , in order for the average and marginal product functions to have their theoretical properties, it must be the case that

• A) a < 0, b > 0
• B) a > 0, b < 0
• C) a < 0, b < 0
• D) a > 0, b > 0

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Definitions:

Financial Account Deficit

A situation where a country's financial outflows to other countries exceed the inflows from them.

Current Account Surplus

A situation where a country's earnings from exports exceeds its spending on imports, leading to net positive income from foreign transactions.

Balance of Trade

The net difference in value between a country's exports and imports over a certain period.

Balance on Capital Account

A national accounting measure that records all transactions for foreign investments and loans going in and out of a country.