Question

In the Cobb-Douglas production function :

the marginal product of labor (L) is equal to β1

the average product of labor (L) is equal to β2

if the amount of labor input (L) is increased by 1 percent,

the output will increase by β1 percent if the amount of Capital input (K) is increased by 1 percent,

the output will increase by β2 percent

C and D

Answer 1

Ans: C and D

Explanation:

The Cobb-Douglas production function represents the relationship between two or more inputs,i.e., capital and labor and the quantity of outputs that can be produced.

The Cobb-Douglas production function basically represents constant returns to scale, because B1 + B2 = 1. So, in the Cobb-Douglas production function, if the amount of labor input (L) is increased by 1 percent, the output will increase by β1 percent if the amount of Capital input (K) is increased by 1 percent, the output will increase by β2 percent.

Thus, the answer is C and D.