The Cobb-Douglas production function is a widely used representation of the relationship between inputs and outputs in production processes. It is typically expressed in the form:
where:
This function assumes that the production process exhibits constant returns to scale, meaning that if you increase all inputs by a certain percentage, the output will increase by the same percentage. The parameters and indicate the degree to which labor and capital contribute to production, and they typically sum to 1 in a case of constant returns. The Cobb-Douglas function is particularly useful in economics for analyzing how changes in input levels affect output and for making decisions regarding resource allocation.
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