Question: need help with this, calculations and explanations please. Show that, when the production function is Cobb-Douglas (for simplicity, assume that there are only two inputs:
Show that, when the production function is Cobb-Douglas (for simplicity, assume that there are only two inputs: Y=F(K,L)=KL, with >0 and >0 ), constant returns to scale and diminishing marginal returns (to capital and labor here) are equivalent. Note: to show that AB, one must show that AB (if statement A holds then B holds too) and BA (conversely). Show that, when the production function is Cobb-Douglas (for simplicity, assume that there are only two inputs: Y=F(K,L)=KL, with >0 and >0 ), constant returns to scale and diminishing marginal returns (to capital and labor here) are equivalent. Note: to show that AB, one must show that AB (if statement A holds then B holds too) and BA (conversely)
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