Cobb-Douglas Production Function  1. Estimate the Cobb-Douglas production function Q ¼ αLβ1Kβ2, where Q = output; L = labour input; K = capital input; and α, β1, and β2 are the parameters to be estimated. 2. For the Cobb-Douglas production function, test whether the coefficients of capital and labour are statistically significant. For Cobb-Douglas production function, determine the percentage of the variation in output that is explained by the regression equation. 3. For Cobb-Douglas production function, determine the labour and capital estimated parameters and give an economic interpretation of each value. 4. Determine whether this production function exhibits increasing, decreasing, or constant returns to scale. (Ignore the issue of statistical significance.

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A:

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A:

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A:

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A: (1-a) Y/K; increasing marginal decreasing returns to scale capital per worker.