Describe the relationship demonstrated by a production function. ...

[sam.t96]

Describe the relationship demonstrated by a production function.
 
  What will be an ideal response?

Question 2

Refer to the above figure. An increase in aggregate demand between real Gross Domestic Product (GDP) levels Y0 and Y1
 
  A) would not increase output since the economy is already working at full capacity.
  B) would have no effect on the price level.
  C) would cause price levels to fall.
  D) would most likely result in some inflation.

[jjorrostieta]

Answer to Question 1

The production function shows the relationship between the level of output of a good and the factors of production that are inputs to production.

Answer to Question 2

D