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Suppose you have a Cobb-Douglas function with a capital elasticity of output (a) of 0.28 and a labor elasticity of output (b) of 0.84. What statement is correct?

a. There are increasing returns to scale
b. If the amount of labor input (L) is increased by 1%, the output will increase by 0.84%.
c. If the amount of capital input (K) is decreased by 1%, the output will increase by 0.28%.
d. The sum of the exponents in the Cobb-Douglas function is 1.12.
e. All of the above

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M948122

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