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With the Cobb-Douglas production function Y=zK^1/4(N^d)^3/4, if both capital and labour increase by 70%, what will happen tooutput? A. Since the average value of the

With the Cobb-Douglas production function

Y=zK^1/4(N^d)^3/4, if both capital and labour increase by 70%, what will happen tooutput?

A.

Since the average value of the exponents in the production function is1/2, output will only increase by 35%.

B.

Output will increase by exactly 70%.

C.

Output will also increase by 70%, but only if z takes a value greater than 1.0.

D.

Because the production function exhibits diminishingreturns, output will increase by less than 70%.

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