If an estimated Cobb-Douglas production function is

Q = 10K

0.6

L

0.8

, (

a

) what are the

output elasticities of capital and labor? If the firm increases only the quantity of capital or

only the quantity of labor used by 10 percent, by how much would output increase? (

b

)

What type of returns to scale does this production function indicate? If the firm increases

at the same time both the quantity of capital and the quantity if labor used by 10 percent,

by how much would output increase?