Question

Your boss suggests that a​ Cobb-Douglas production function could be a good representation of that​ country's income. Is your boss​ right?
a. ​Yes, you can tell by the way the income shares for each factor move in opposite directions over time.
b. ​No, if it were a​ Cobb-Douglas production​ function, the income shares would be constant over time.
c. The production function cannot be determined without knowing how real GDP changed over time.
d. ​No, if it were a​ Cobb-Douglas production​ function, the income shares would change in the same direction over time.

Answer 1

Answer: b. ​No, if it were a​ Cobb-Douglas production​ function, the income shares would be constant over time.

Explanation:

Cobb–Douglas production function is used to show the technological relationship that takes place between the inputs and output that the inputs on the production process can produce.

In this scenario, we are informed that the boss suggests that a Cobb-Douglas production function could be a good representation of that country's income. In this case, the answer is No. The Boss is wrong because if it was to be a Cobb-Douglas production function , then the income share would be constant over time.

In this case, we can see that there is fluctuation of the factor shares as they're not constant but rather changes with time.