Constant returns to scale in the matching function means that, given any constant x 0, A) m(xQ, xA) = xm(Q,A). B) m(xQ, xA) xm(Q,A). C) m(xQ, xA)

Question

Constant returns to scale in the matching function means that, given any constant x > 0,
A) m(xQ, xA) = xm(Q,A).
B) m(xQ, xA) > xm(Q,A).
C) m(xQ, xA) < xm(Q,A).
D) m(xQ, xA) = $e^{xm(Q,A)}$.
E)m(xQ, xA) = $ \frac{1}{x} $ m(Q,A).

Quizplus · Accepted Answer

Constant returns to scale means that increasing the quantity of both the job seekers and job vacancies by the same factor (x) results in the same proportional increase in the number of matches. This is exactly what choice A says, so it is the best choice.

Constant Returns to Scale in the Matching Function Means That exm(Q,A)e^{xm(Q,A)}exm(Q,A)

Constant Returns to Scale in the Matching Function Means That $e^{xm(Q,A)}$