For the production function q = f(K, L) the ratio of the percentage change on K/L with percentage change on PK/PL is called elasticity of substitution. Write down a constant returns to scale Cobb-Douglas production function and find its elasticity of substitution for the K = 10, L = 7, PK = 4 and PL = 3 levels.
For the production function q = f(K, L) the ratio of the percentage change on K/L with percentage change on PK/PL is called elasticity of substitution. Write down a constant returns to scale Cobb-Douglas production function and find its elasticity of substitution for the K = 10, L = 7, PK = 4 and PL = 3 levels.
Chapter1: Making Economics Decisions
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For the production function q = f(K, L) the ratio of the percentage change on K/L with percentage change on PK/PL is called elasticity of substitution. Write down a constant returns to scale Cobb-Douglas production function and find its elasticity of substitution for the K = 10, L = 7, PK = 4 and PL = 3 levels.
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