For the Cobb-Douglas Production Function F(L,K)= AL^aK^b,a Technical Change That

question 59

Multiple Choice

For the Cobb-Douglas production function F(L,K) = AL^aK^b,a technical change that increases the productivity of capital would be represented by

• A) An increase in the value of a
• B) An increase in the value of b
• C) Values of a and b for which b > a
• D) An increase in the value of A

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Definitions:

Engel Curve

A graphical representation that shows the relationship between income and the demand for a good or service, keeping all other factors constant.

Utility Function

A mathematical representation of how a consumer ranks different baskets of goods according to their level of satisfaction.

High Income

Refers to individuals or households that earn a significantly higher amount of money compared to the average income levels within a specific geographic region or within a particular demographic.

Economic Theory

The study of how goods, services, and wealth are produced, distributed, and consumed in society.