Multiple Choice
The assumption of constant returns to scale suggests that if N and K both increase by 5%:
A) Y will increase by exactly 5%.
B) Y will increase by less than 5%.
C) Y will increase by more than 5%.
D) The capital- labour ratio (K/N) will decrease.
E) The capital- labour ratio (K/N) will increase.
Correct Answer:
Verified
Correct Answer:
Verified
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