A company is considering a rate change, either an increase or a decrease in production, and
X_t = production in a time period
R_t = increase in production rate from Period t-1 to Period t
D_t = decrease in production rate from Period t-1 to Period t
Which of the following is correct?

Question

Quizplus · Accepted Answer

The equation X_t F1F1F1S1F1F1F10 X_{t - 1} = R_t F1F1F1S1F1F1F10 D_t represents the conservation of production rate. This means that the change in production from period t-1 to period t should equal the sum of the increase and decrease in production rate from t-1 to t. Therefore, the correct answer is D, as it represents this conservation law.

A Company Is Considering a Rate Change, Either an Increase