. Exercise 7.8

The following table shows estimates of Cobb-Douglas production function parameters for several industries.

Industry	Capital Elasticity	Production Worker Elasticity	Nonproduction Worker Elasticity	Sum of Elasticities
(11)	(22)	(33)	(1+2+31+2+3)
Food and beverages	0.555	0.439	0.076	1.07
Textiles	0.121	0.549	0.335	1.004
Furniture	0.205	0.802	0.103	1.109
Petroleum	0.308	0.546	0.093	0.947
Stone, clay, etc.	0.632	0.032	0.366	1.029
Primary metals	0.371	0.077	0.509	0.958

Source: John R. Moroney, "Cobb-Douglas Production Functions and Returns to Scale in U.S. Manufacturing Industry," Western Economic Journal 6, no. 1 (December 1967): Table 1, p. 46.

Which of the following industries appear to exhibit decreasing returns to scale?Check all that apply.

Food and beverages

Textiles

Stone, clay, etc.

Primary metals

Which industry comes closest to exhibiting constant returns to scale?

Textiles

Petroleum

Food and beverages

Primary metals

In which industry will a given percentage increase in capital result in the largest percentage increase in output?

Petroleum

Textiles

Primary metals