For the Cobb-Douglas production function F(L,K)= AL^αK^β,a technical change that increases the productivity of capital would be represented by: A) an increase in the value of α. B) an increase in the value of β. C) values of α and β for which β α. D) an increase in the value of A.

Question

For the Cobb-Douglas production function F(L,K)= AL^αK^β,a technical change that increases the productivity of capital would be represented by: A) an increase in the value of α. B) an increase in the value of β. C) values of α and β for which β > α. D) an increase in the value of A.

Quizplus · Accepted Answer

An increase in the value of β in the Cobb-Douglas production function represents an increase in the productivity of capital, as β is the exponent of capital (K) and indicates how output changes with a change in the amount of capital, holding other factors constant.

For the Cobb-Douglas Production Function F(L,K)= ALαKβ,a Technical Change That

For the Cobb-Douglas Production Function F(L,K)= AL^αK^β,a Technical Change That