Question

question 9 of 11
national income: how it is earned — questions for review
what does constant returns to scale imply about the distribution of income?
that labor will be paid according to its marginal product, while capital will not
that long - term economic profits will be positive
that economic profits will be zero
that owners of firms will benefit disproportionately compared with workers

Explanation:

In a production - function with constant returns to scale, in a competitive market equilibrium, economic profits are zero. This is because if firms were making positive economic profits, new firms would enter the market, increasing supply and driving down prices until profits are eliminated. If firms were making negative economic profits, some would exit the market, reducing supply and increasing prices until losses are eliminated. Labor and capital are paid according to their marginal products in a competitive market with constant returns to scale, and there is no reason for long - term positive economic profits or for firm owners to benefit disproportionately.

Answer:

that economic profits will be zero