Answer to Question #221697 in Economics for Desmond Ternor

Question

What are the special properties of the Cobb-Douglas production function, and how might the function be used to calculate the sources of growth?

Answer 1

The elasticity of substitution between the inputs is constant and equal to one due to the functional form. A two-input Cobb-Douglas production function can be represented graphically in the form of isoquants: combinations of both inputs for which the output is constant.

A Cobb-Douglas production function models the relationship between production output and production inputs (factors). It is used to calculate ratios of inputs to one another for efficient production and to estimate technological change in production methods.