If a Production Function Exhibits Constant Returns to Scale, Doubling

question 17

Multiple Choice

If a production function exhibits constant returns to scale, doubling all of the inputs

• A) more than doubles output due to the catch-up effect.
• B) has absolutely no impact on output because output is constant.
• C) less than doubles output due to diminishing returns.
• D) doubles output.

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Definitions:

Panama

A country in Central America, located at the junction of North and South America, known for the Panama Canal which connects the Atlantic and Pacific Oceans.

Stagflation

An economic condition characterized by slow economic growth and high unemployment coupled with high inflation.

Economic Stagnation

A prolonged period of little or no growth in the economy, characterized by high unemployment, stagnant wages, and low levels of investment and consumer spending.

Unemployment

The condition of not having a job despite actively seeking work, often used as an economic indicator reflecting the health of an economy.