In the Cobb-Douglas Production Function Y = AK³/⁴ᴸ¹/⁴

question 40

Multiple Choice

In the Cobb-Douglas production function Y = AK³/⁴ᴸ¹/⁴,

• A) capital is a more expensive input than labour.
• B) capital is more plentiful than labour.
• C) diminishing returns to capital are three times greater than are diminishing returns to labour.
• D) capital has a larger share in national income than does labour.

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Definitions:

Book Value

The net value of a company's assets minus its liabilities, often used to evaluate its financial health.

Salvage Value

The approximated value of an asset at the close of its functional life.

Useful Life

The estimated duration of time that an asset is expected to be operational and economically viable.

Units-Of-Activity

A depreciation method where the expense is based on the actual usage or activity of the asset rather than the passage of time.