Solved

Scenario: Two Economies, a and B, Have Identical Aggregate Production

Question 19

Multiple Choice

Scenario: Two economies, A and B, have identical aggregate production functions with diminishing returns. In both economies, capital and labor are equally important for production. Economy A has twice as many efficiency units of labor as economy B. Economy B has twice as much physical capital stock as economy A.
-Refer to the scenario above.If you were to draw the aggregate production functions for economies A and B,holding efficiency units of labor constant,you would draw ________.


A) one aggregate production function, where economy B's level of production is greater than economy A's level of production
B) two separate aggregate production functions, where the one for economy B lies above the one for economy A
C) one aggregate production function, where both economies' output are at the same level
D) two separate aggregate production functions, where the one for economy A lies above the one for economy B

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions