Question No 1 The Cobb- Douglas production function is given by the form Y = ALAKB Where, Y = Output (mt/day), L = Labour (hours/mt) K = Capita (Rs/mt). By taking the natural logarithm of each term in the function, that is LnY= LnA+¤L1L+BLNK. Using a standard multiple linear regression model the parameters of the function were obtained as follows; Ln Y = 1.389 +0.8LnL + 0.6LNK (0.53) (0.02) (0.04) The standard error for each estimated parameter is shown in parentheses below the estimate. a) b) c) d) function Calculate elasticity of labour and elasticity capital and interpret the results. Is this production function exhibit the law of diminishing returns in the short run? Construct the equation for isoquant. Distinguish between Cobb Douglas production function and Classical production

Question No 1 The Cobb- Douglas production function is given by the form Y = ALAKB Where, Y = Output (mt/day), L = Labour (hours/mt) K = Capita (Rs/mt). By taking the natural logarithm of each term in the function, that is LnY= LnA+¤L1L+BLNK. Using a standard multiple linear regression model the parameters of the function were obtained as follows; Ln Y = 1.389 +0.8LnL + 0.6LNK (0.53) (0.02) (0.04) The standard error for each estimated parameter is shown in parentheses below the estimate. a) b) c) d) function Calculate elasticity of labour and elasticity capital and interpret the results. Is this production function exhibit the law of diminishing returns in the short run? Construct the equation for isoquant. Distinguish between Cobb Douglas production function and Classical production

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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