Scenario: Assume the Following Aggregate Production Functions for Two Countries

question 11

Multiple Choice

Scenario: Assume the following aggregate production functions for two countries, A and B, respectively.
YA=A KA¹/² ᴴA¹/²
ʸB=A KB²/³ ᴴB¹/³
-Refer to the scenario above.What is true about the aggregate production functions?

• A) Country A's production function has higher returns to scale.
• B) Country B's production function has higher returns to scale.
• C) Both countries' production functions have equal returns to increases in K and H.
• D) Both countries' production functions have constant returns to scale.

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Definitions:

Concession Bargaining

A negotiation process where union members agree to give up certain benefits or accept pay cuts in exchange for something else, such as job security.

Wage

The fixed regular payment, typically calculated on an hourly, daily, or piecework basis, made by an employer to an employee.

Benefit Reductions

The act of decreasing the amount or scope of the benefits (such as health insurance, retirement pensions) provided to employees by an employer.

Harassment

Behavior that is intimidating, hostile, or offensive to another person, often in the workplace or social setting.