How about Cobb-Douglas: N\K, LP=KLK In the Crs case, you cant solve for scale, only for factor proportions Use cost minimization to solve min RK+WL+VKL??0 This gives uS: JRK= Y1? JpWL or, using the g constraint, K=O W1?p11?J RJ And L=Q WY1?Jp )0r"h=?J Thats a little bit better - in this case the elasticity of demand for labor is equal to one minus labors share in the production functionHow about Cobb-Douglas: fÝK,LÞ = KJL K In the CRS case, you can’t solve for scale, only for factor proportions. Use cost minimization to solve: min K,L,V RK + WL + V KJL 1?J ? Q This gives us: JRK = Ý1 ? JÞWL or, using the Q constraint, K = Q WÝ1?JÞ RJ 1?J And L = Q RJ WÝ1?JÞ J or W L /L /W = ?J That’s a little bit better– in this case, the elasticity of demand for labor is equal to one minus labor’s share in the production function