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:

Market-Based View

A strategic perspective that emphasizes the importance of external market conditions in shaping a firm's strategy and competitive advantage.

Industry Attractiveness

The desirability of an industry to firms and investors, based on factors like profitability, growth potential, and competition levels.

Organizational Resources

Assets, capabilities, processes, employee time, information, and knowledge that an organization controls, useful for creating and implementing strategies.

Tangible Resources

Physical and material assets owned by a business, such as buildings, machinery, and inventory.