Constant returns to scale implies that if N and K both increase by 3% that
A. output (Y) will increase by 3%.
B. Y/N will increase by 3%.
C. Y/N will increase by less than 3%.
D. the capital-labor ratio will increase by 3%.
Answer:A
Constant returns to scale implies that if N and K both increase by 3% that
A. output (Y) will increase by 3%. B. Y/N will increase by 3%. C. Y/N will increase by less than 3%. D. the capital-labor ratio will increase by 3%.