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

question 21

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 physical capital stock constant at each county's given level,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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