Scenario: Two Economies, a and B, Have Identical Aggregate Production

question 19

Multiple Choice

Scenario: Two economies, A and B, have identical aggregate production functions with diminishing returns. In both economies, capital and labor are equally important for production. Economy A has twice as many efficiency units of labor as economy B. Economy B has twice as much physical capital stock as economy A.
-Refer to the scenario above.If you were to draw the aggregate production functions for economies A and B,holding efficiency units of labor constant,you would draw ________.

• A) one aggregate production function, where economy B's level of production is greater than economy A's level of production
• B) two separate aggregate production functions, where the one for economy B lies above the one for economy A
• C) one aggregate production function, where both economies' output are at the same level
• D) two separate aggregate production functions, where the one for economy A lies above the one for economy B

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Definitions:

Annual Report

A comprehensive report on a company's activities, financial performance, and strategy, provided annually to shareholders and the public.

Allowance Method

An accounting technique used to estimate and prepare for the amount of accounts receivable that may not be collectible.

Uncollectible Accounts

Accounts receivable that a company does not expect to collect and thus writes off as a loss.

Accounting Convention

Accepted accounting principles that guide the reporting and financial presentation of a company's accounts.