If an Economy with Constant Returns to Scale Were to Double

question 77

Multiple Choice

If an economy with constant returns to scale were to double its physical capital stock,its available natural resources,and its human capital,but leave the size of the labor force the same,

• A)its output would stay the same and so would its productivity.
• B)its output and productivity would increase,but less than double.
• C)its output and productivity would increase by more than double.
• D)None of the above is correct.

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Definitions:

Operating Expenses

All the costs associated with the day-to-day operations of a business, excluding the direct costs of producing goods and services.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business, including accounts payable, short-term loans, and taxes payable.

Indirect Costs

Expenses not directly tied to the production of goods or services, such as rent, utilities, and administrative salaries.

Manufacturing Environment

The setting or conditions within which manufacturing processes take place, including the tools, machinery, and workforce involved.