For This Question,assume That There Are Decreasing Returns to Capital,decreasing

question 47

Multiple Choice

For this question,assume that there are decreasing returns to capital,decreasing returns to labor,and constant returns to scale.Now suppose that both capital and labor decrease by 5%.Given this information,we know that output (Y) will

• A)not change.
• B)decrease by less than 5%.
• C)decrease by 5%.
• D)the reduction in Y will be more than 5% but less than 10%
• E)none of the above

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Definitions:

Active Way

Engaging or participating directly and purposefully in activities or processes.

Social Exchange Theory

A social psychological and sociological perspective that explains social change and stability as a process of negotiated exchanges between parties.

Economic Model

A theoretical construct that represents economic processes through a set of variables and a set of logical and/or quantitative relationships between them.

Benefits

Advantages or positive outcomes derived from a particular action, decision, or situation.