2) The general Cobb-Douglas production function for two inputs is given by:q = f (k, l) = AKªL® where 0 < a < 1 and 0 < ß < 1. For this production function:a.) Show that fr > 0, f¡ > 0, frk < 0, fu < 0 and frlfik > 0.b.) Show that= a and ɛg,iEq,kB (Note that ɛ's are elasticities).||C.) Show that, for this Cobb-Douglas function, production is CRS if a + ß = 1.

Answered: Image /qna-images/answer/1a8568d8-70d4-4729-a78b-6e12ea1bbd99.jpg

2) The general Cobb-Douglas production function for two inputs is given by: q = f (k, l) = AKªIB_where 0 0, fi > 0, fkk < 0, fu < 0 and frl = fix > 0. b.) Show that Eq,k Εα and Eq.l = B (Note that ɛ's are elasticities). C.) Show that, for this Cobb-Douglas function, production is CRS if a + ß = 1.

2) The general Cobb-Douglas production function for two inputs is given by: q = f (k, l) = AKªIB_where 0 0, fi > 0, fkk < 0, fu < 0 and frl = fix > 0. b.) Show that Eq,k Εα and Eq.l = B (Note that ɛ's are elasticities). C.) Show that, for this Cobb-Douglas function, production is CRS if a + ß = 1.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.5P

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