When the elasticity of substitution in a Cobb-Douglas production is one, it means that distribution of income is
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1 mark, −0.33MicroeconomicsFactor markets and income distributionDistribution theory: factor shares, Euler's theorem and rentHardabout 2 min
UoH 2017 Question 48: Factor markets and income distribution
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Factor markets and income distribution has come up 55 times in 6 exams since 2006.
What this question tests
This question is on Distribution theory: factor shares, Euler's theorem and rent, part of Factor markets and income distribution in Microeconomics.
How output is divided among factors, and when payments to factors exactly exhaust output.
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