When estimating a short-run production function of the form $Q = A L ^ { 3 } + B L ^ { 2 }$ ,it is necessary to specify in the computer routine that A)A 0. C)the intercept term is forced to equal zero. D)a and b E)all of the above

Question

When estimating a short-run production function of the form $Q = A L ^ { 3 } + B L ^ { 2 }$ ,it is necessary to specify in the computer routine that
A)A < 0.
B)B > 0.
C)the intercept term is forced to equal zero.
D)a and b
E)all of the above

Quizplus · Accepted Answer

The given production function $Q = A L ^ { 3 } + B L ^ { 2 }$ does not include a constant term (intercept), indicating that when the level of labor (L) is zero, the quantity produced (Q) is also zero. Therefore, it is necessary to specify that the intercept term is forced to equal zero in the computer routine. Choices A and B regarding the signs of A and B are not necessarily required without further context on the nature of the production function.

When Estimating a Short-Run Production Function of the Form Q=AL3+BL2Q = A L ^ { 3 } + B L ^ { 2 }Q=AL3+BL2

When Estimating a Short-Run Production Function of the Form $Q = A L ^ { 3 } + B L ^ { 2 }$