Part 1 If a production function has constant returns to scale, output canbe doub
ID: 1230953 • Letter: P
Question
Part 1If a production function has constant returns to scale, output canbe doubled if
A. labor alone doubles.
B. all inputs but labor double.
C. all of the inputs double.
D. None of the above is correct.
Part 2
In the country of Krypton, the price of lead increased from $20 perpound to $21 per pound during a time when the overall price levelincreased by 5 percent. During this period, the real price oflead
A. increased.
B. decreased.
C. stayed the same.
D. might haveincreased, decreased or stayed the same; more information is neededto be sure.
Part 3
In the long run an increase in the saving rate
A. doesn't change the level of productivity orincome.
B. raises the levels of both productivity andincome.
C. raises the level of productivity but not the levelof income.
D. raises the level of income but no the level ofproductivity.
D. might haveincreased, decreased or stayed the same; more information is neededto be sure.
Explanation / Answer
Part 1 If a production function has constant returns to scale, output canbe doubled if A. labor alone doubles. B. all inputs but labor double.I would consider alldouble except labor because more labor might actually decreaseproducitivity, if it is on a constant scale C. all of the inputsdouble. D. None of the above is correct. Part 2 In the country of Krypton, the price of lead increased from $20 perpound to $21 per pound during a time when the overall price levelincreased by 5 percent. During this period, the real price oflead A. increased. B. decreased. C. stayed the same. - since thechange is 5% and the overall change by 5%, so there is nochange D. might haveincreased, decreased or stayed the same; more information is neededto be sure. Part 3 In the long run an increase in the saving rate A. doesn't change the level of productivity orincome.- B. raises the levels of both productivity andincome. C. raises the level of productivity but not the levelof income. D. raises the level of income but nothe level of productivity.- since savings is part of income, itwill get higher