Question

Which of the following is not one of the strengths of the Cobb-Douglas production function?

a. Both marginal product and returns to scale can be estimated from it.
b. It can be converted into a linear function for ease of calculation.
c. It shows a production function passing through increasing returns to constant returns and then to decreasing returns.
d. The sum of the exponents indicates whether returns to scale are increasing, constant or decreasing.

Answer 1

Option D is correct one.

In Cobb-Douglas production, the return to scale depends on the sum of the exponents.

Step-by-step explanation:

It shows a production function passing through increasing returns to constant returns and then to decreasing returns.