Question

Write short notes Cobb - Douglas production function

Answer 1

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in Cobb-Douglas production function, there are two inputs, capital and labour. Cobb-Douglas production function is given by the following mathematical form. Roughly speaking, Cobb-Douglas function tells that about 75% of the increase in manufacturing production is because of labour input and the remaining 25% is because of the capital input. Economists took a great interest in Cobb-Douglas production function because it is consistent with constant returns to scale. Therefore, when the inputs of capital and labour (K and L) are raised by a constant g, the output Q will also increase by g. Log form of Cobb-Douglas production function is given below

log Q = log A + a log L + b log K