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Suppose That the Production Function Is F(x1, X2) = (Xa1

Question 25

Multiple Choice

Suppose that the production function is f(x1, x2) = (xa1 + xa2) b, where a and b are positive constants. For what values of a and b is there a diminishing technical rate of substitution?


A) For any value of a if b < 1
B) For any values of a and b if ab < 1
C) For any values of a and b if a > b
D) For any value of b if a < 1
E) None of the above.

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