10. Exercise 7.10 The Cobb-Douglas production function can be shown to be a special case of a larger class of linear homogeneous production functions having the following mathematical form: Q=y[5K+(1-6)L-P]-/P where y is an efficiency parameter that shows the output resulting from given quantities of inputs; & is a distribution parameter (0 ≤5 ≤ 1) that indicates the division of factor income between capital and labor; p is a substitution parameter that is a measure of substitutability of capital for labor (or vice versa) in the production process; and v is a scale parameter (v > 0) that indicates the type of returns to scale (increasing, constant, or decreasing). Complete the following derivation to show that when v = 1, this function exhibits constant returns to scale. First of all, if v = 1: -P Q = y[§K ³ + (1 -8)L¯P]-1/P = [SKP(-1/P)+(1-8)L−P(-1/p)] Then, increase the capital K and labor L each by a factor of A, or K* = (A)K and L* = (A)L. If the function exhibits constant returns to scale, then Q* = (A)Q. Q* = v[8(x)Kº + (1-6)(A)L¯P]-1/P = = Y[SAK P(-1/P) + (1-8)AL¯P(-1/p)] || || || = = λο