# Cobb-Douglas

1. The attached spreadsheet details the results of a Cobb-Douglas production function estimation for electricity production. Electricity is produced using heat (fuel), capital, and labor.

(a) Write out the complete model.

(b) What type of returns to scale does electricity production exhibit?

(c) Calculate the marginal product of labor for the Jack Watson plant in Mississippi.

(d) Interpret your answer to part b. Be sure to use the units of measure in your interpretation.

2. What is "excess capacity"? Graph this.

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#### Solution Summary

1. The attached spreadsheet details the results of a Cobb-Douglas production function estimation for electricity production. Electricity is produced using heat (fuel), capital, and labor.

(a) Write out the complete model.

(b) What type of returns to scale does electricity production exhibit?

(c) Calculate the marginal product of labor for the Jack Watson plant in Mississippi.

(d) Interpret your answer to part b. Be sure to use the units of measure in your interpretation.

2. What is "excess capacity"? Graph this.