QUESTION QUESTION 8 Suppose that the production function y-f(x_1.x_2) (where: y is output level, x_1 is a
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QUESTION 8 Suppose that the production function y-f(x_1.x_2) (where: y is output level, x_1 is a variable input and x_2 is a fixed input), is plotted in the (y,x_1) space. According to economic theory, we would expect: Oay to increase with x_1 at a decreasing rate, due to increasing returns to scale. Oby to increase with x_1 at an increasing rate, due to diminishing returns to scale. Oy to increase with x_1 at a decreasing rate, due to diminishing returns to scale. Ody to increase with x_1 at an increasing rate, due to increasing returns to scale. QUESTION 8 Suppose that the production function y-f(x_1.x_2) (where: y is output level, x_1 is a variable input and x_2 is a fixed input), is plotted in the (y,x_1) space. According to economic theory, we would expect: Oay to increase with x_1 at a decreasing rate, due to increasing returns to scale. Oby to increase with x_1 at an increasing rate, due to diminishing returns to scale. Oy to increase with x_1 at a decreasing rate, due to diminishing returns to scale. Ody to increase with x_1 at an increasing rate, due to increasing returns to scale.
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Macroeconomics
ISBN: 978-1464168505
5th Canadian Edition
Authors: N. Gregory Mankiw, William M. Scarth
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