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 term u using the equation Q = lambda K^beta_1 L^beta_2 M^beta_3 e^u, where lambda, beta_1, beta_2, and beta_3 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? A linear regression function. A logarithmic regression function. An exponential regression function. A quadratic regression function.

Explanation / Answer

here we need to ise logarithmic regression functions since coefficients are in the power.

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