the following Cobb Q=aLBFB₂K B₂ where L = labor input in worker hours, F = fuel input in gallons, K = capital input in number of buses, and Q = output measured in millions of bus miles. ortation system in a particular city: Suppose that the parameters (a, B₁, B2, and B3) of this model were estimated using annual data for the past 25 years. The following results were obtained: a = 0.0012; B₁=0.45; B₂=0.20; and 33 = 0.30. Determine the labor, fuel, and capital input production elasticities. Input Production Elasticities Labor Fuel Capital Suppose that labor input (worker hours) is increased by 1% next year (with the other inputs held constant). What is the approximate percentage change in output? Suppose that capital input (number of buses) is decreased by 3% next year (when certain older buses are taken out of service). Assuming that the other inputs are held constant, what is the approximate percentage change in output? returns to scale appear to characterize this bus transportation system. (Hint: Ignore the issue of statistical significance.)

the following Cobb Q=aLBFB₂K B₂ where L = labor input in worker hours, F = fuel input in gallons, K = capital input in number of buses, and Q = output measured in millions of bus miles. ortation system in a particular city: Suppose that the parameters (a, B₁, B2, and B3) of this model were estimated using annual data for the past 25 years. The following results were obtained: a = 0.0012; B₁=0.45; B₂=0.20; and 33 = 0.30. Determine the labor, fuel, and capital input production elasticities. Input Production Elasticities Labor Fuel Capital Suppose that labor input (worker hours) is increased by 1% next year (with the other inputs held constant). What is the approximate percentage change in output? Suppose that capital input (number of buses) is decreased by 3% next year (when certain older buses are taken out of service). Assuming that the other inputs are held constant, what is the approximate percentage change in output? returns to scale appear to characterize this bus transportation system. (Hint: Ignore the issue of statistical significance.)

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 9E

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Consider the following Cobb-Douglas production function for the bus transportation system in a particular city: Q=aL B₁F B₂K B3 where L labor input in worker hours, F = fuel input in gallons, K = capital input in number of buses, and Q = output measured in millions of bus miles. Suppose that the parameters (α, B₁, B₂, and ß3) of this model were estimated using annual data for the past 25 years. The following results were obtained: α= 0.0012; B₁ = 0.45; ß₂ = 0.20; and ß3 = 0.30. Determine the labor, fuel, and capital input production elasticities. Input Production Elasticities Labor Fuel Capital Suppose that labor input (worker hours) is increased by 1% next year (with the other inputs held constant). What is the approximate percentage change in output? % Suppose that capital input (number of buses) is decreased by 3% next year (when certain older buses are taken out of service). Assuming that the other inputs are held constant, what is the approximate percentage change in output? %…
Consider the following Cobb-Douglas production function for the bus transportation system in a city: Q = Lβ1Fβ2Bβ3Where L = labour input in worker hours F = fuel input in gallons B = capital input in number of buses Q = output measured in millions of bus miles Suppose that the parameters (α, β1, β2 and β3) of this model were estimated using annual data for the past 25 years. The following results were obtained: β1 = 0.45, β2 = 0.20 and β3 = 0.30a. Determine the (i) labour, (ii) fuel, and (iii) capital-input production elasticities .b. Suppose that labour input (worker hours) is increased by 2 percent next year (with the other inputs held constant), determine the approximate percentage change in output. c. Suppose that capital input (number of buses) is decreased by 3 percent next year (which, certain older buses are taken out of service). Assuming that the other inputs are held constant, determine the approximate percentage change in output. d. What type of returns to scale appears…
Consider the following Cobb-Douglas production function for the bus transportation system in a particular city: Q=aL B₁F B₂K B3 where L = labor input in worker hours, F = fuel input in gallons, K = capital input in number of buses, and Q = output measured in millions of bus miles. Suppose that the parameters (α, B₁, B₂, and ß3) of this model were estimated using annual data for the past 25 years. The following results were obtained: a = 0.0012; B₁ = 0.45; ß₂ = 0.20; and B3 = 0.30. Determine the labor, fuel, and capital input production elasticities. Input Production Elasticities Labor Fuel Capital Suppose that labor input (worker hours) is increased by 2% next year (with the other inputs held constant). What is the approximate percentage change in output? % Suppose that capital input (number of buses) is decreased by 1% next year (when certain older buses are taken out of service). Assuming that the other inputs are held constant, what is the approximate percentage change in output? %…
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