Consider the following Cobb-Douglas production function for the bus transportation system in a city: Q = Lβ1Fβ2Bβ3 Where L = labour input in worker hours F = fuel input in gallons B = capital input in number of buses Q = output measured in millions of bus miles Suppose that the parameters (α, β1, β2 and β3) of this model were estimated using annual data for the past 25 years. The following results were obtained: β1 = 0.45, β2 = 0.20 and β3 = 0.30 a. Determine the (i) labour, (ii) fuel, and (iii) capital-input production elasticities
Consider the following Cobb-Douglas production function for the bus transportation system in a city: Q = Lβ1Fβ2Bβ3 Where L = labour input in worker hours F = fuel input in gallons B = capital input in number of buses Q = output measured in millions of bus miles Suppose that the parameters (α, β1, β2 and β3) of this model were estimated using annual data for the past 25 years. The following results were obtained: β1 = 0.45, β2 = 0.20 and β3 = 0.30 a. Determine the (i) labour, (ii) fuel, and (iii) capital-input production elasticities
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Consider the following Cobb-Douglas production function for the bus transportation system in a city:
Q = Lβ1Fβ2Bβ3
Where L = labour input in worker hours
F = fuel input in gallons
B = capital input in number of buses
Q = output measured in millions of bus miles
Suppose that the parameters (α, β1, β2 and β3) of this model were estimated using annual data for the past 25 years. The following results were obtained:
β1 = 0.45, β2 = 0.20 and β3 = 0.30
a. Determine the (i) labour, (ii) fuel, and (iii) capital-input production elasticities
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