A \"Cobb-Douglas\" production function relates production (Q) to factors of prod

Question

A "Cobb-Douglas" production function relates production (Q) to factors of production, capital (K), labor (L), raw materials (M), and an error tem u using the equation Q= an LAMA. where a, P1, P2, and by are production parameters, Suppose that you have data on production and the factors of production from a random sample of firms with the same Cobb-Douglas production function. Which of the following regression functions provides the most useful transformation to estimate the model? OA. A quadratic regression function. OB. An exponential regression function, OC. A logarithmic regression function. OD. A linear regression function.

Explanation / Answer

Option C, because by taking log on both sides the regression function will be linear in parameter.Now we can use the OLS to find the estimates correctly.

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