Question

3. The White Noise Corporation has estimated the following Cobb-Douglas production function using monthly observations for the past two years:

ln Q = 2.485 + 0.50 ln K + 0.50 ln L + 0.20 ln N

where Q is the number of units of output, K is the number of units of capital, L is the number of unit of labor, and N is the number of units of raw materials. With respect to the above results, answer the following questions when K = 90, L = 485 and N =4500.

a. Q

b. Rewrite the estimated function in the form of a power function.

c. Find the marginal products of capital, labor, and raw materials

d. Find the value of the output elasticities of K, L, and N

e. Determine whether the returns to scale are increasing, decreasing or constant

f. Suppose the price of capital is $187.30 per unit, the price of labor is $34.75, and price of raw materials is $1.50 per unit. This this an optimal combination of resources

g. What price would the company have to charge for the product to maximize profits

only F & G please

Answer 1