For This Question,assume That There Are Decreasing Returns to Capital,decreasing

question 32

Multiple Choice

For this question,assume that there are decreasing returns to capital,decreasing returns to labor,and constant returns to scale.A reduction in the capital stock will cause which of the following?

• A)a reduction in output
• B)no change in output
• C)an increase in output per capita
• D)increase the capital-labor ratio
• E) none of the above

---

Definitions:

Direct Method

A cash flow statement presentation method that shows actual cash inflows and outflows from operating activities, as opposed to the indirect method which starts with net income and adjusts for non-cash transactions.

Cash Basis

A financial recording strategy that logs earnings and expenditures upon the actual receipt or payment of money, as opposed to when they are earned or incurred.

Direct Method

A way of preparing a cash flow statement where cash receipts and payments are reported directly.

Operating Activities

Transactions and other events related to the core business operations, affecting the operational cash flows of a company.