Answer to Question #199068 in Economics for AAA

Question

Consider the following Cobb-Douglas production function

 

Find

       i.                                                                                                                                        (4)

Answer 1

In economics, production is understood as the use of resources and technologies in order to obtain a product that could be sold. It is the process by which a product is created or service is provided that is useful to the customer. Supply and demand in the market determine their price. The quantity of goods released, and ultimately its value is shown by production and production function. Demand is influenced by price and other factors. The latter include the income of consumers, their tastes, the cost of substitute goods. Economic well-being is created in the production process. This means that any economic activity is directly or indirectly aimed at satisfying human needs. The economic well-being of the state depends on the latter. The greater the degree of satisfaction of needs and the share of the middle class in the population, the higher the national development. The production function explains this improvement in the well-being of people in the production process.

The two main factors of production are labor and capital. Their combination in a certain proportion allows you to create a product. The Cobb-Douglas production function reflects the technological relationship between the amount of labor and capital to produce a certain quantity of a good. This model is two-factor and was tested statistically by two scientists, by whose names it was named, in 1927-1947. Sometimes the term Cobb-Douglas production function has a narrower meaning, referring to constant returns to scale.