Refer to the following figure when answering
Figure 4.1: Production Function
-Consider Figure 4.1. The shape of this production function suggests that $\alpha$ in the production function $Y = K ^ { \alpha } L ^ { 1 - \alpha }$ is:
A) equal to one
B) greater than one
C) equal to zero
D) less than one
E) Not enough information is given.

Question

Refer to the following figure when answering  
Figure 4.1: Production Function 
-Consider Figure 4.1. The shape of this production function suggests that $\alpha$ in the production function $Y = K ^ { \alpha } L ^ { 1 - \alpha }$ is:
A) equal to one 
B) greater than one 
C) equal to zero 
D) less than one 
E) Not enough information is given.

Quizplus · Accepted Answer

The production function $Y = K ^ { \alpha } L ^ { 1 - \alpha }$ is a Cobb-Douglas production function. If the shape of the production function suggests diminishing returns to scale, then $\alpha$ is less than one.

Refer to the Following Figure When Answering Figure α\alphaα

Refer to the Following Figure When Answering
Figure $\alpha$