Suppose you own a software development company. You plan to recruit an economist to estimate the returns to or output elasticities of inputs used in software development. The economist devised the following production function to be estimated with data:
Q equals A cross times C A to the power of a cross times S F to the power of b cross times F N to the power of c cross times M K to the power of d cross times A C to the power of e cross times W S to the power of f
Where,
A: index of technology
CA: capital such as computers, machines and tools, structures used in software development
SF: software developers
FN: financial analysts
MK: marketing analysts
AC: accountants
WS: other workers and staffs.
The economist estimates the following returns to or output elasticities for the inputs
'a': return to or output elasticity of capital =0.4
'b': return to or output elasticity of software developer =0.9
'c': return to or output elasticity of financial analysts = 0.6
'd': return to or output elasticity of marketing analysts = 0.6
'e': return to or output elasticity of accountants = 0.6
'f': return to or output elasticity of all other workers and staffs = 0.4
What is the estimated return to scale?