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The Parameter a Re-Scales the Production Function f(k,)=A(αρ+(1α)kρ)β/ρf ( k , \ell ) = A \left( \alpha \ell ^ { - \rho } + ( 1 - \alpha ) k ^ { - \rho } \right) ^ { - \beta / \rho }

Question 4

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The parameter A re-scales the production function f(k,)=A(αρ+(1α)kρ)β/ρf ( k , \ell ) = A \left( \alpha \ell ^ { - \rho } + ( 1 - \alpha ) k ^ { - \rho } \right) ^ { - \beta / \rho } -- allowing us to transform a decreasing returns to scale production function to an increasing returns to scale production function.

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