All Else Equal,if There Are Diminishing Returns and Constant Returns

question 75

Multiple Choice

All else equal,if there are diminishing returns and constant returns to scale,then what happens to productivity if capital and labor both increase but capital increases by more?

• A)Productivity will definitely fall.
• B)Productivity will definitely be unchanged.
• C)Productivity will definitely rise.
• D)None of the above are necessarily correct.

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Definitions:

Norske Skog

A Norway-based company known for its production of newsprint and magazine paper.

Elton Mayo

A pioneering researcher in industrial human relations who led the Hawthorne Studies, which highlighted the importance of social factors in the workplace such as employee morale and productivity.

Productive Efficiency

A situation where an economy or firm produces goods or services at the lowest possible cost, often achieved by fully utilizing all available resources.

Pareto Analysis

A statistical technique used in decision making that is based on the principle that 80% of effects come from 20% of causes, often used to prioritize tasks.