Answer to Question #220330 in Macroeconomics for Biscaro

Question

Analyse the special properties of the Cob-Douglass production function, and how might
the function be used to calculate the sources of growth?

Answer 1

 The formula for the Cob-Douglass production function is Q(L, K) = A L^aK^b, in which labor and capital are the two special properties of production with the greatest impact on the quantity of output.

where,

•  - Q is the quantity of products.
•  - L is the quantity of labor.
•  - K is the quantity of capital.
•  - A is a positive constant.
•  - a and b are constants between 0 and 1.

The returns to scale are measured by the sum of exponents of the Cobb-Douglas production function. The exponents of labor and capital in the Cobb-Douglas production function measure output elasticities of labor and capital, respectively.