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Consider the following Cobb-Douglas production function for a firm that uses labor hours ( L ), capital ( K ), and energy ( E )

Consider the following Cobb-Douglas production function for a firm that uses labor hours (L), capital (K), and energy (E) as inputs:

Q = (0.0012L^0.45)(K^0.3)(E^0.2)

  1. Determine the labor, capital and energy production elasticities.
  2. Suppose that worker hours are increased by 2 percent holding other inputs constant. What would be the resulting percentage change in output?
  3. Suppose that capital is decreased by 3 percent holding other inputs constant. What would be the resulting percentage change in output?
  4. What type of returns to scale appears to characterize this production function?

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