We assume that in the short run in a perfectly competitive market the:

The idea that the production function exhibits _______implies that ________

A) increasing returns; output should increase steadily as technology grows B) constant returns; each additional unit of labor employed generates an increasing amount of real GDP C) diminishing returns; the Lucas Wedge increases at output increases D) increasing returns; potential GDP is always increasing E) diminishing returns; each additional unit of labor employed generates an ever-decreasing amount of real GDP

If a small percentage increase in the price of a good results in a rather large percentage reduction in the quantity demanded of the good, demand is said to be

a. vertical. b. relatively inelastic. c. relatively elastic. d. robust.