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en:cobb-douglas-output-elasticity [2016/01/02 14:56] federico |
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====== Cobb-Douglas Output Elasticity ====== | ====== Cobb-Douglas Output Elasticity ====== | ||
- | The Cobb-Douglas Output Elasticity is constant and equal to α or β. | + | The [[en:cobb-douglas-production-function|Cobb-Douglas]] Output Elasticity is constant and equal to α or β. |
- | If the Cobb-Douglas production function is **Q(L,K) = A L<sup>β</sup>K<sup>α</sup>**, the output elasticity with respect to labor (L) is α and the output elasticity with respect to capital (K) is β. | + | If the Cobb-Douglas production function is **Q(L,K) = A L<sup>β</sup>K<sup>α</sup>**, the output elasticity with respect to labor (L) is β and the output elasticity with respect to capital (K) is α. |
To prove this, we must take into account the definition of output elasticity: it is the porcentual change in output in respond to a porcentual change in levels of either labor or capital. | To prove this, we must take into account the definition of output elasticity: it is the porcentual change in output in respond to a porcentual change in levels of either labor or capital. | ||
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It is noteworthy that both output elasticities are constant and greater than 0 and smaller than 1. | It is noteworthy that both output elasticities are constant and greater than 0 and smaller than 1. | ||
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+ | See Also: | ||
+ | [[Elasticity of Production]] |