Reference no: EM131277475

Suppose you are given the following cross-section data on the production of a given good in a particular industry for 2010.

Company	Q	K	L
1	709	2400	59
2	650	2290	58
3	600	2150	58
4	180	570	44
5	300	900	51
6	345	1170	52
7	480	1740	53
8	540	2010	55
9	200	625	47
10	250	775	51
11	300	1020	50
12	370	1310	51
13	425	1600	53
14	500	1875	54
15	365	1300	55
16	700	2430	58

d. Now estimate the following function

Q = AL^aK^b e^e

(i) Report the estimated function below. 

(ii) Convert the estimated function to its original form

e.  Evaluate the estimated function in terms the statistical significance of each coefficient and the overall significance of the regression equation.  Use 5% level of significance.

f. Are the marginal products of L and K subject to diminishing marginal returns? Show why.

g.   What is the output elasticity with respect to L and K?  What is the degree of returns to scale?

h.  How many units of output can be produced if K= 2,500 and L = 60?