The Cobb-Douglas production function is a widely used mathematical model in economics that describes the relationship between two or more inputs (typically labor and capital) and the amount of output produced. It is represented by the formula:
where:
This function demonstrates how output changes in response to proportional changes in inputs, allowing economists to analyze returns to scale and the efficiency of resource use. Key features of the Cobb-Douglas function include constant returns to scale when and the property of diminishing marginal returns, suggesting that adding more of one input while keeping others constant will eventually yield smaller increases in output.
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