Answer to Question #283636 in Economics for Sal

Question

Dependency theory suggests that countries should become more inward-looking and less entangled with developed countries, trading only with

 other developing countries. True/False

 

If the production function is given as Y = L∙K, then it follows constant returns to scale. True/False

 

When the output stays the same after the use of each input has been doubled, then the economy’s production function follows a constant returns to scale. True/False

Answer 1

Dependency theory is of the notion that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealthy states, enriching the latter at the expense of the former.

So, the statement is true.

A constant returns to scale is when an increase in input results in a proportional increase in output.

So, the statement is true.

When the output stays the same after the use of each input has been doubled, then the economy’s production function follows a decreasing returns to scale.

So, the statement is false.