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    Test regression result of Cobb-Douglas production formula for a firm

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    After a logarithmic transformation, we obtain the following regression result of Cobb-Douglas production formula for a firm:

    This symbol goes on top: ^ on top of the Ln Qi.

    Ln Qi = 2.294 +0.3451 Ln Ki + 0.7534 Ln Li

    a) Estimate the level of output if firm uses 140 units of capital and 230 units of labor.
    b) Write the function in its original form by determining A, alpha(a) and beta(B).
    c) Is this company operates under constant return to scale?

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    Solution Summary

    The solution provides full formalas and caculations to arrive at solutions to each problem.