Answered: For the (Cobb-Douglas) production…

For the (Cobb-Douglas) production function, Y =LaKb , find: The two output elasticities The marginal rate of substitution The elasticity of substitution

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.9P

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Question

For the (Cobb-Douglas) production function, Y =L^aK^b, find:

The two output elasticities
The marginal rate of substitution
The elasticity of substitution

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Step 1: Define the terms

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Step 2: Calculate output elasticities

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Step 3: Determine the marginal rate of technical substitution

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Step 4: Determine the elasticity of substitution

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