Elluminate09-19-11

# Elluminate09-19-11 - Elluminate – 7 • Among the...

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Unformatted text preview: Elluminate – 7 • Among the conditions for the production function are positive marginal product and concavity (positive derivatives and negative definite or negative semi-definite hessian matrix) • As a starting point, I generate a sample of 150 observations using a quadratic production function. A0 41.0569 A12 0.3610 (31.9353) (0.1012) A1 2.8010 A13 0.0524 (4.0867) (0.1115) A2 15.4518 A22-0.2386 (1.515) (0.0228) A3 5.8894 A23 0.0720 (1.1206) (0.0258) A11-0.6406 A33-0.2949 (0.1844) (0.0277) • The idea is to resample the dataset, keeping the observations which are concave. • The alternative is to directly impose the constraint that the eigenvalues are less than zero. 0.4264 0.1607 0.0000948 λ- =- • The student of economic theory has been taught to write where L is the quantity of labor, C is a quantity of capital, and O is the rate of output of commodities. • He is instructed to assume all workers alike, and to measure L in man- hours of labour; • He is told something about the index-number problem involved in choosing a unit of output; and • Then is hurried on to the next question, in hope that he will forget to ask in what units C is measured. • Before ever he does ask, he has become a professor, and so sloppy habits of thought are handed on from one generation to another. ( 29 , O f L C = • The question is certainly not an easy one to answer....
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Elluminate09-19-11 - Elluminate – 7 • Among the...

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