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Scenario: Two economies, A and B, have identical aggregate production functions with diminishing returns. In both economies, capital and labor are equally important for production. Economy A has twice as many efficiency units of labor as economy B. Economy B has twice as much physical capital stock as economy A.


Refer to the scenario above. If you were to draw the aggregate production functions for economies A and B, holding efficiency units of labor constant, you would draw ________.

▸ one aggregate production function, where both economies' output are at the same level

▸ two separate aggregate production functions, where the one for economy B lies above the one for economy A

▸ one aggregate production function, where economy B's level of production is greater than economy A's level of production

▸ two separate aggregate production functions, where the one for economy A lies above the one for economy B

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