The Application Returns to Scale in Various Industries provides estimated parameter values for the Cobb-Douglas production function,
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The Application "Returns to Scale in Various Industries" provides estimated parameter values for the Cobb-Douglas production function, \(q=L^{a} K^{b}\), for firms in various industries. Use the estimates for the Danish food and beverages firm, the Japanese rubber firm, and the New Zealand mining firm to explore the relationship between returns to scale and diminishing marginal returns. If \(a=1\) and \(b=1\), does the law of diminishing marginal returns still hold?
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The CobbDouglas production function is given by q La Kb where q is the output L is the quantity of labor input K is the quantity of capital input and ...View the full answer
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