Economics · Theory of Production
Which of the following statements is true regarding the Cobb-Douglas production function?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It assumes constant returns to scale for all combinations of labor and capital exponents.
- 2The sum of the exponents in the Cobb-Douglas function determines the nature of returns to scale.✓
- 3The marginal products of labor and capital are constant and do not vary with the level of output.
- 4It cannot represent diminishing marginal returns for either input.
Correct answer
The sum of the exponents in the Cobb-Douglas function determines the nature of returns to scale.
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