What does the Cobb-Douglas production function assume about the input shares in the economy?
A)the capital share is larger than the labor share of income
B)both the capital and labor shares of income grow over time
C)both the capital and labor shares of income remain relatively constant over time
D)the capital share of income is equal to the labor share of income
E)none of the above

Question

Quizplus · Accepted Answer

The Cobb-Douglas production function assumes that the share of income for capital and labor remains relatively constant over time. It does not assume that either share will grow or that one share is larger than the other.

What Does the Cobb-Douglas Production Function Assume About the Input