Does this production function, q = 10L0.5K0.3, experience increasing, decreasing or constant returns to scale?
A) Decreasing because a 100% increase in inputs increases outputs by 80%.
B) Increasing because an 80% increase in inputs increases outputs by 100%.
C) Decreasing because 0.5 + 0.3 < 1.
D) A and C.
D
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All other things unchanged, why does an increase in money demand cause the aggregate demand curve will shift to the left?
A) Because the resulting increase in bond prices reduces consumption spending. B) Because the resulting decrease in bond interest rate will lead to an increase in the quantity of investment and net exports. C) Because the resulting higher interest rate will lead to a lower quantity of investment and net exports. D) Because the resulting lower interest rate will lead to lower net exports.
Mrs. Lovejoy decides to invest in companies which she believes are producing its goods based on the preferences of consumers. Mrs. Lovejoy is investing in companies that are
A) always going to be profitable. B) allocatively efficient. C) productively efficient. D) both productively and allocatively efficient.