What are the production elasticities of demand, Macroeconomics

The following Cobb-Douglas production function is used to describe the output generated by a local government maintenance agency.

Q = αLβ1Kβ2Eβ3

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 α, β1, β2, and β3.

Α = 0.01;  β1 = 0.5, β2 = 0.4, and β3 = 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?

 

Posted Date: 4/1/2013 5:31:21 AM | Location : United States







Related Discussions:- What are the production elasticities of demand, Assignment Help, Ask Question on What are the production elasticities of demand, Get Answer, Expert's Help, What are the production elasticities of demand Discussions

Write discussion on What are the production elasticities of demand
Your posts are moderated
Related Questions
What is the formula for consumer price index?

Money is anything which is acceptable in settlement of a debt. But, paradoxically, the main asset used to settle debts in modern economies is other debts. After all, bank deposits

Differentiate between Actual and Potential output.  Actual output is that level which economy in fact produces. In contrast, potential output is the aggregate capacity output o

Financing of Fiscal Deficit: Since the size of balanced budget of the multiplier is small, it is not for all time possible to get the needed demand expansion by raising the exp

with the help of a graph, explain factors that may cause a shift in the balance of payments

Aggregate supply and the AS curve The AS curve is the aggregate supply as a function of P. It is horizontal when thesupply is low and upward sloping when the s

Why is quantitative easing used during liquidity trap when it lowers interest rates too?

(40 points) Consider two consumers, A and B. A and B both want perfect consumption smoothing (c = cf) and both have no current wealth. However, the two consumers have different inc

Imagine Adam Smith living in today's economic climate. Describe what current economic issues about which he might be most concerned with and state why?

Suppose you are dealt two cards from a standard deck of playing cards. a) What is the probability of being dealt a pair of aces? b) There are 13 possible pairs possible (Aces throu