The following table shows estimates of Cobb-Douglas production function parameters for several industries. Industry Capital Elasticity Production Worker Elasticity Nonproduction Worker Elasticity Sum of Elasticities (β1β1) (β2β2) (β3β3) (β1+β2+β3β1+β2+β3) Food and beverages 0.555 0.439 0.076 1.07 Textiles 0.121 0.549 0.335 1.004 Furniture 0.205 0.802 0.103 1.109 Petroleum 0.308 0.546 0.093 0.947 Stone, clay, etc. 0.632 0.032 0.366 1.029 Primary metals 0.371 0.077 0.509 0.958 Source: John R. Moroney, “Cobb-Douglas Production Functions and Returns to Scale in U.S. Manufacturing Industry,” Western Economic Journal 6, no. 1 (December 1967): Table 1, p. 46. Which of the following industries appear to exhibit decreasing returns to scale? Check all that apply. Textiles Primary metals Petroleum Food and beverages Which industry comes closest to exhibiting constant returns to scale? Primary metals Petroleum Food and beverages Textiles In which industry will a given percentage increase in nonproduction workers result in the largest percentage increase in output? Food and beverages Textiles Petroleum Primary metals
The following table shows estimates of Cobb-Douglas production function parameters for several industries. Industry Capital Elasticity Production Worker Elasticity Nonproduction Worker Elasticity Sum of Elasticities (β1β1) (β2β2) (β3β3) (β1+β2+β3β1+β2+β3) Food and beverages 0.555 0.439 0.076 1.07 Textiles 0.121 0.549 0.335 1.004 Furniture 0.205 0.802 0.103 1.109 Petroleum 0.308 0.546 0.093 0.947 Stone, clay, etc. 0.632 0.032 0.366 1.029 Primary metals 0.371 0.077 0.509 0.958 Source: John R. Moroney, “Cobb-Douglas Production Functions and Returns to Scale in U.S. Manufacturing Industry,” Western Economic Journal 6, no. 1 (December 1967): Table 1, p. 46. Which of the following industries appear to exhibit decreasing returns to scale? Check all that apply. Textiles Primary metals Petroleum Food and beverages Which industry comes closest to exhibiting constant returns to scale? Primary metals Petroleum Food and beverages Textiles In which industry will a given percentage increase in nonproduction workers result in the largest percentage increase in output? Food and beverages Textiles Petroleum Primary metals
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The following table shows estimates of Cobb-Douglas production function parameters for several industries.
|
Industry
|
Capital Elasticity
|
Production Worker Elasticity
|
Nonproduction Worker Elasticity
|
Sum of Elasticities
|
|---|---|---|---|---|
|
(β1β1)
|
(β2β2)
|
(β3β3)
|
(β1+β2+β3β1+β2+β3)
|
|
| Food and beverages | 0.555 | 0.439 | 0.076 | 1.07 |
| Textiles | 0.121 | 0.549 | 0.335 | 1.004 |
| Furniture | 0.205 | 0.802 | 0.103 | 1.109 |
| Petroleum | 0.308 | 0.546 | 0.093 | 0.947 |
| Stone, clay, etc. | 0.632 | 0.032 | 0.366 | 1.029 |
| Primary metals | 0.371 | 0.077 | 0.509 | 0.958 |
Source: John R. Moroney, “Cobb-Douglas Production Functions and Returns to Scale in U.S. Manufacturing Industry,” Western Economic Journal 6, no. 1 (December 1967): Table 1, p. 46.
Which of the following industries appear to exhibit decreasing returns to scale? Check all that apply.
Textiles
Primary metals
Petroleum
Food and beverages
Which industry comes closest to exhibiting constant returns to scale?
Primary metals
Petroleum
Food and beverages
Textiles
In which industry will a given percentage increase in nonproduction workers result in the largest percentage increase in output?
Food and beverages
Textiles
Petroleum
Primary metals
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