Multiple Choice
Assume that there are decreasing returns to capital, decreasing returns to labour, and constant returns to scale. Now suppose that both capital and labour increase by 10%. Given this information, we know that output (Y) will:
A) not change.
B) increase by 10%.
C) increase by more than 10%.
D) increase by less than 20% but more than 10%.
E) increase by less than 10%.
Correct Answer:
Verified
Correct Answer:
Verified
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