How would you choose to estimate a production function for a single pl

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?

ANSWER

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.