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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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