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Hypotheses to Explain the Positive Correlation Between Factor Accumulation and Production

question 65

Multiple Choice

Hypotheses to explain the positive correlation between factor accumulation and production efficiency include each of the following except:


Definitions:

Income Effect

The change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Opportunity Cost

The lost potential gain from other alternatives when one alternative is chosen.

Income Effects

The changes in an individual's or economy's income and how that changes their spending and saving behavior.

Substitution Effects

The change in consumption patterns due to a change in the relative prices of goods.

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