Answer to Question #104358 in Microeconomics for Musbahu Ahmad Ibrahim

Question

how to derive formula of cobb Douglas production function

Answer 1

P(L, K) = bL^αK^β

where:

P = total production (the monetary value of all goods produced in a year) •

L = labor input (the total number of person-hours worked in a year) •

K = capital input (the monetary worth of all machinery, equipment, and buildings) •

b = total factor productivity •

α and β are the output elasticities of labor and capital, respectively. These values are constants determined by available technology.