Question: Consider the following production function, known in the literature as the transcendental production function (TPF).
where Q, L, and K represent output, labor, and capital, respectively.
(a) How would you linearize this function?
(b) What is the interpretation of the various coefficients in the TPF?
(c) Given the data in Table 2.1, estimate the parameters of the TPF.
(d) Suppose you want to test the hypothesis that B4 = Bs = O. How would you test these hypotheses? Show the necessary calculations.
(e) How would you compute the output-labor and output-capital elasticities for this model? Are they constant or variable?
