In an economy,if three-fourths of national income goes to the human capital of workers and one-fourth to physical capital stock,the Cobb-Douglas production function for this economy will be ________,where Y denotes total output,A denotes the level of technology,K denotes the physical capital stock,and H denotes the efficiency units of production.
A) Y = A × K¹/⁴ × H³/⁴
B) Y = A × K⁴ × H³
C) Y = A × 1/4 × K × 3/4 × H
D) Y = A × K¹/³ × H²/³

Question

Quizplus · Accepted Answer

The Cobb-Douglas production function is given by Y = A * K^α * H^β, where α + β = 1. In this case, α = 1/4 and β = 3/4, since one-fourth of national income goes to physical capital stock (K) and three-fourths goes to the human capital of workers (H). Therefore, the Cobb-Douglas production function for this economy will be Y = A * K^(1/4) * H^(3/4), which is choice A.

In an Economy,if Three-Fourths of National Income Goes to the Human