A “Cobb–Douglas” production function relates production (Q) to factorsof production, capital (K), labor (L), and raw materials (M), and an errorterm u using the equation Q = λKβ1Lβ2Mβ3eu, where λ, β1, β2, and β3 areproduction parameters. Suppose that you have data on production and thefactors of production from a random sample of firms with the same Cobb–Douglas production function. How would you use regression analysis toestimate the production parameters?

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A “Cobb–Douglas” production function relates production (Q) to factors
of production, capital (K), labor (L), and raw materials (M), and an error
term u using the equation Q = λKβ1Lβ2Mβ3eu, where λ, β1, β2, and β3 are
production parameters. Suppose that you have data on production and the
factors of production from a random sample of firms with the same Cobb–
Douglas production function. How would you use regression analysis to
estimate the production parameters?

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