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Production Function Example

1- Example of a Cobb Douglas Production Function

The Cobb Douglas Production Function is widely used in economic models. It takes the following form:

Q(L,K) = A Lβ Kα

L:labor K:capital Q:output A>0 0<α<1 0<β<1

The main characteristics of the Cobb-Douglas production function are:

- The marginal product is positive and decreasing. - Output elasticity is constant, equal to α for L or β for K. - Return to scale are α+β

This example is as follows:

A = 50 α = 0.7 β = 0.3

The plot of this example is:

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