If Output Is Produced with Two Factors of Production and with Increasing

question 30

Multiple Choice

If output is produced with two factors of production and with increasing returns to scale,

• A)there cannot be diminishing marginal rate of substitution.
• B)all inputs must have increasing marginal products.
• C)on a graph of production isoquants, moving along a ray from the origin, output more than doubles as the distance from the origin doubles.
• D)the marginal product of at least one input must be increasing.
• E)all inputs must have decreasing marginal products.

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Definitions:

Libertarianism

The political philosophy according to which the government should punish crimes and enforce voluntary agreements but not redistribute income.

Income Redistribution

The reallocation of income across a society through taxation, monetary policies, and welfare systems.

Total Utility

The total satisfaction received from consuming a particular quantity of a good or service.

Incentives

Rewards or penalties that influence the motivation and behaviors of individuals and organizations towards certain actions.