Answer to Question #227896 in Economics of Enterprise for rasi

Question

production period output capital labour

1 225 10 20

2 240 12 22

3 278 10 26

4 212 14 18

5 199 12 16

6 297 16 24

7 242 16 20

8 155 10 14

9 215 8 20

10 160 8 14

estimating cd function

estmate the parameters of a cobb-douglas production function using the least squares regression method

Answer 1

$Y=AK^a+L^b\\ LogY =LogA+ aLogK+b \space LogL$

regression gives $LogA= 1.011$ hence $A= e^{(1.011)}= 2.75$

regression gives $b=0.1930, a=0.8784$