The Cobb-Douglas Production Function Is: Q = 1

question 19

Multiple Choice

The Cobb-Douglas production function is: Q = 1.4*L^0.6*K^0.5.What would be the percentage change in output (%∆Q) if labor grows by 3.0% and capital is cut by 5.0%? [Hint: %∆Q = (E_L * %∆L) + (E_K * %∆K) ]

• A)%∆Q = + 3.0%
• B)%∆Q = + 5.0%
• C)%∆Q = - 0.70%
• D)%∆Q = - 2.50%
• E)%∆Q = - 5.0%

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