The Cobb-Douglas Production Function F(L,K)= AL^aK^bwill Exhibit Decreasing Returns to Scale

question 5

Multiple Choice

The Cobb-Douglas production function F(L,K) = AL^aK^bwill exhibit decreasing returns to scale when

• A) A + b = 1
• B) A + b < 1
• C) A + b > 1
• D) A + b = 0

Differentiate between goods with elastic and inelastic demand based on characteristics such as necessity, luxury, and availability of substitutes.

Apply the midpoint method to calculate various forms of elasticity, including price elasticity of demand, income elasticity of demand, and cross price elasticity.

Identify factors affecting the price elasticity of demand for a good.

Estimate the effects of price changes on demand using elasticity concepts.

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