Question: The following regression equation is estimated as a production function: R log Q 1.37 +0.632 log K + 0.452 log L R = 0.98 (0.257)

The following regression equation is estimated as a production function: R log Q 1.37 +0.632 log K + 0.452 log L R = 0.98 (0.257) (0.219) cov(bx.

b) -0.044. The sample size is 40. Test the following hypotheses at the 5% level of significance:

(a) bxbL.

(b) There are constant returns to scale.

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