The Cobb- Douglas production function is given by the form Y = ALaKß 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+«LNL+BL1K. 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. а) b) с) Construct the Cob- Douglas production function Measure marginal product of labour and marginal product of capital when L=10 and K=5 Determine factor intensity and returns to scale of this production function.
The Cobb- Douglas production function is given by the form Y = ALaKß 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+«LNL+BL1K. 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. а) b) с) Construct the Cob- Douglas production function Measure marginal product of labour and marginal product of capital when L=10 and K=5 Determine factor intensity and returns to scale of this production function.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter4A: Problems In Applying The Linear Regression Model
Section: Chapter Questions
Problem 2E
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