Which of the following is an assumption in the DMP model about the matching function?
A) The increase in matches from an increase in Q is increasing in Q.
B) The number of matches increases if Q increases but A decreases.
C) The number of matches increases if Q or A decrease.
D) The increase in matches from an increase in A is increasing in A.
E) The increase in matches from an increase in Q is decreasing in Q.

Question

Quizplus · Accepted Answer

The DMP model assumes that the matching function exhibits diminishing returns to scale, meaning that the increase in matches from an increase in Q (or A) is decreasing in Q (or A).

Which of the Following Is an Assumption in the DMP