Assume That Constant Returns to Scale Exists and That N

question 7

Multiple Choice

Assume that constant returns to scale exists and that N and K both decrease by 3%.Given this information,we know that

• A)output (Y)will decrease 6%.
• B)Y will decrease by 3%.
• C)Y will decrease by less than 3%.
• D)the capital-labor ratio (K / N)will decrease.

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Definitions:

Merchandise Inventory Account

An account that records the value of goods that a retailer, wholesaler, or distributor has available for sale to customers at any given time.

Specific Identification

An inventory costing method where individual costs are assigned to specific items of inventory, often used for unique or high-value items.

Identical Units

Units of product that are the same in every aspect, often used in inventory management and costing methods.

Inventory Costing Method

A system used to value inventory, such as First-In, First-Out (FIFO) or Last-In, First-Out (LIFO), impacting the calculation of cost of goods sold and ending inventory.