Assume that the production function is Cobb-Douglas with parameter $\alpha$ = 0.3. If factors are paid their marginal products, capital and labor, respectively, receive the shares of income:
A)0.3 and 0.3.
B)0.7 and 0.7.
C)0.3 and 0.7.
D)0.7 and 0.3.

Question

Quizplus · Accepted Answer

In a Cobb-Douglas production function, the parameter $\alpha$ represents the output elasticity of capital, meaning capital receives a share of income equal to $\alpha$ (0.3), and labor receives the remaining share, which is $1-\alpha$ (0.7).

Assume That the Production Function Is Cobb-Douglas with Parameter α\alphaα = 03 If Factors Are Paid Their Marginal Products, Capital and =

Assume That the Production Function Is Cobb-Douglas with Parameter $\alpha$ = 03 If Factors Are Paid Their Marginal Products, Capital and =