In the Cobb-Douglas production function $Y = K ^ { a } L ^ { 1 - a }$ , if a = 1/4, then:
A) capital's share of GDP is one-fourth
B) labor's share of GDP is half
C) capital's share of GDP is three-fourths
D) labor's share of income is one-fourth
E) capital's share of GDP is four

Question

Quizplus · Accepted Answer

In the Cobb-Douglas production function, the exponent of capital (K) represents capital's share of GDP. If $a = 1/4$, then capital's share of GDP is one-fourth.

In the Cobb-Douglas Production Function Y=KaL1−aY = K ^ { a } L ^ { 1 - a }Y=KaL1−a

In the Cobb-Douglas Production Function $Y = K ^ { a } L ^ { 1 - a }$