For the Cobb-Douglas production function F(L,K)= AL^aK^b,a technical change that increases the productivity of capital would be represented by A) An increase in the value of a B) An increase in the value of b C) Values of a and b for which b a D) An increase in the value of A

Question

For the Cobb-Douglas production function F(L,K)= AL^aK^b,a technical change that increases the productivity of capital would be represented by A) An increase in the value of a B) An increase in the value of b C) Values of a and b for which b > a D) An increase in the value of A

Quizplus · Accepted Answer

An increase in the value of b represents an increase in the output elasticity of capital, indicating that capital has become more productive.

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

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