E3 We consider a CES production function.0-10-1+ (1 – a)L,º= AQ1: As o →1, prove the Cobb-Douglas production function AKEL}-«.Q2: As o →0, prove the Leontief production function Y;= A min(Kt, L;).t»

Given production function Yt=AαKtσ-1σ+(1-α)Ltσ-1σσσ-1

Answered: We consider a CES production function.…

We consider a CES production function. Y = A + (1 – a)L̟º Q1: As o → 1, prove the Cobb-Douglas production function AK L}=«. 1-a

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 2E

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

We consider a CES production function.
0-1
0-1
+ (1 – a)L,º
= A
Q1: As o →
1, prove the Cobb-Douglas production function AKEL}-«.
Q2: As o →
0, prove the Leontief production function Y;
= A min(Kt, L;).
t»

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