If the Exponents in the Production Function Were 0

question 10

Multiple Choice

if the exponents in the production function were 0.80 for x₁ and 0.20 for x₂, this production function would exhibit (constant, increasing, decreasing) returns to scale and (would, would not) have diminishing technical rate of substitution.

• A)constant, would
• B)decreasing, would not
• C)increasing, would
• D)constant, would not
• E)decreasing, would

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Definitions:

Human Capital

The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value.

Compensation of Employees

Payments and benefits received by employees in exchange for their labor, including wages, salaries, and benefits such as health insurance.

Total Income

The sum of all earnings or revenues received by an individual or organization before any deductions or taxes.

Compensation of Employees

All forms of financial returns and tangible services and benefits employees receive as part of an employment relationship.