Assume That Constant Returns to Scale Exists and That N

question 22

Multiple Choice

Assume that constant returns to scale exists and that N and K both increase by 2%.Given this information,we know that

• A)output (Y)will increase by 4%.
• B)Y will increase by 2%.
• C)Y will increase by less than 2%.
• D)Y will increase by less than 4% and more than 2%.

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Definitions:

Accounts Payable

Liabilities representing amounts owed to creditors for goods and services the company has received but not yet paid for.

Raw Materials Purchases

is the total cost of raw materials bought for production during a given period.

Direct Materials Purchase Budget

A financial plan that estimates the cost and quantity of raw materials required for production in a specific period.

Ending Inventories

The value of goods available for sale or use at the end of an accounting period.