What are the production elasticities of demand for labor, Ask an Expert

Economics

Elasticities of Demand and output

The following Cobb-Douglas production function is used to describe the output generated by a local government maintenance agency.
Q = ?L?1K?2E?3
Where L represents number of worker hours, K represents number of trucks used, and E represents energy used. Statistical estimated generated the following values for ?, ?1, ?2, and ?3.
? = 0.01; ?1 = 0.5, ?2 = 0.4, and ?3 = 0.2

a. What are the production elasticities of demand for labor, capital (trucks) and energy?

b. If worker hours (labor) are increased by 10% next year, how much will output (Q) increase?

c. If the number of trucks (K) decreases by 10% next year, how much will output (Q) decrease?

d. What type of returns to scale is consistent with the above production function?

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M925433

Have any Question?Write your Review or question?

Related Questions in Business Economics

One of the authors received a credit card bill for 3167 and

One of the authors received a credit card bill for 3167 and it included a charge of 1622 that was not valid. Find the values of the absolute amd relative errors.

A grocery store rewards card has a 7 digit number to

A grocery store rewards card has a 7 digit number to identify the user. The first digit must be 1 or 2. The remaining six digits take values randomly between 0 - 9 inclusively. What is the probability that the ID number ...

Imagine that in the consumption function autonomous

Imagine that in the consumption function, autonomous consumption is equal to 17.5, and the marginal propensity to consume is equal to 0.69. If current income (or output) is equal to 253.4, what is the value of aggregate ...

Assume 20 of customers who enter a clothing store make a

Assume 20% of customers who enter a clothing store make a purchase and customers behave independently of one another. Ten customers enter the store in the next hour. The salesman on duty makes $20 per hour plus a $10 com ...

Armstrong faber produces a standard number-two pencil

Armstrong Faber produces a standard number-two pencil called Ultra-Lite. The demand for Ultra-Lite has been fairly stable over the past ten years. On average, Armstrong Faber has sold 457,000 pencils each year. Furthermo ...

How does the monopolies make production and pricing

How does the Monopolies Make Production and Pricing Decisions in Economics?

What happens if wages and prices adjust very slowly in

What happens if wages and prices adjust very slowly in response to various shocks to the economy? Does this make business cycle, i.e. expansions and contractions in the economy, shorter or longer?

Suppose that the demand curve for tickets to see a football

Suppose that the demand curve for tickets to see a football team play a game is given by Q = 80,000 - 40P and marginal cost is zero. The team's stadium can host 75,000 fans. 1) How many tickets would the team sell if it ...

You have an opportunity to buy a bond with a face value of

You have an opportunity to buy a bond with a face value of $10,000 and coupon rate of 14%, payable semi-annually. NOTE: Interest per 6-month period is 7% of Face Value (i.e. $10,000x0.07 = $700 per 6-month period). (i) I ...

A manufacture makes makes two models of an item model 1

A manufacture makes makes two models of an item. Model 1 which accounts for 89% of unit sales, and model 2, which accounts for 11% of unit sales. Because of defects the manufacture has to replace (or exchange) 11% of its ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert