Find sigma the elasticity of substitution

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Reference no: EM131244675

The Constant Elasticity of Substitution Production Function Q(K,L) = A[b(K^b) + (1-b)L^p]y/p

(b = beta p = rho y = gamma)

a. Determine the returns to scale for this production function.

b. Find sigma, the elasticity of substitution.

c. Express K/L as a function of w/r. How does this relationship between K/L and w/r change when p (rho) changes?

Can we find an expression for scale parameter, that shows if the function is constant, increasing or decreasing?

Reference no: EM131244675

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