Scenario: Red Country and Purple Country Have Identical Aggregate Production

Multiple Choice

Scenario: Red Country and Purple Country have identical aggregate production functions. The amount of physical capital stock available to each country is equal. Labor supply in Red Country is HR, while the labor supply in Purple Country is HP.

-Refer to the scenario above.Where would HR lie on the graph if Red Country and Purple Country faced an aggregate production function with constant returns to efficiency units of labor and if efficiency units of labor exceed HP?

A) To the left and below its current level
B) To the right and below its current level
C) To the left and above its current level
D) To the right and above its current level