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Author Question: What are the major issues that must be considered in measuring inputs for regression analysis of ... (Read 41 times)

Medesa

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on: Jul 1, 2018
What are the major issues that must be considered in measuring inputs for regression analysis of production functions?
 
  What will be an ideal response?

Question 2

How would you choose to estimate a production function for a single plant? How would you choose to estimate a production function for a number of firms in an industry? Explain.
 
  What will be an ideal response?


karmakat49

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Reply #1 on: Jul 1, 2018
Answer to Question 1

How is labor to be measured? Can it be measured in hours, and if not, how can the labor actually used in production be expressed? How are materials to be measured? How are capital assets, which have different rates of depreciation and input intensity, to be measured?

Answer to Question 2

Estimating a production function for a single plant generally uses time-series analysis, because it is possible to know if technology and other variables have remained constant over time. To estimate a production function for a number of firms in an industry, it is customary to use cross-sectional analysis because it is unlikely that technology and other relevant factors have remained constant for all firms in the industry over time, and cross-sectional analysis removes this problem.


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