Question
In: Economics
1. The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for...
1. The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for the past two years:
ln Q = 2.773 + 0.20 ln K + 0.70 ln L + 0.70 ln N
where Q is the number of units of output, K is the number of units of capital, L is the number of units of labor, and N is the number of units of raw materials. With respect to the above results, answer the following sections when K = 50, L = 250, and N =870.
a. Q
b. Rewrite the estimated function in the form of a power function.
c. Find the marginal products of capital, labor, and raw materials
d. Find the value of the output elasticities of K, L, and N
e. Determine whether the returns to scale are increasing, decreasing, or constant
f. Suppose the price of capital is $1000 per unit, the price of labor is $700, and the price of raw materials is $200 per unit. This is an optimal combination of resources
g. What price would the company have to charge for the product to maximize profits
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
1. The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for...
1. The White Noise Corporation has estimated the following
Cobb-Douglas production function using monthly observations for the
past two years:
ln Q = 2.773 + 0.20 ln K + 0.70 ln L + 0.70 ln
N
where Q is the number of units of output, K is the number of
units of capital, L is the number of units of labor, and N is the
number of units of raw materials. With respect to the above
results, answer the following...
Consider an economy with the following Cobb-Douglas production function:
Chapter 7, Labor Market Regulation (3
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workers.(a) Derive the equation describing labor demand in this economy
as a function of the real wage and the capital stock
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Y = Ka(LE)1-a
The economy has a capital share of 1/3, a saving rate of 24
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a. What is the steady-state growth rate in total output?
b. What is the steady-state growth rate in output per
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Consider the Cobb-Douglas production function ?=??^??^??^? where
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Cobb-Douglas...again Consider the Cobb-Douglas production function function of the form, q(k, l) = k α l...
Cobb-Douglas...again Consider the Cobb-Douglas production
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(a) Determine the relation between α and the marginal product of
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A firm has the following Cobb-Douglas production function: Q =
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of labor (w) and $100 for each unit of capital (r).
a. Consider a short-run problem where the firm's level of
capital is fixed at 25 units. In this case, derive an exression
that shows the optimal amount of labor (L) the firm would want to
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b. Use your answer for part (a)...
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elasticity with respect to capital equal to 0.3. Also given are the
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5. A Cobb-Douglas production function will yield a cost function that has constant Marginal Cost a....
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