Cobb-Douglas production function

By:
Updated: Aug 20, 2021

A particular type of production function of the form:

Cobb-Douglas production function

where X1 X2 … Xn are quantities of the n factors of production and a0 a1 an. are parameters. It was used by the economists Cobb and Douglas in a path-breaking early piper which sought to explain the relative constancy of the shares of capital and labour in the national income; hence its name. This function, particularly in the speciaJ case where. n =·2 and al + a2 = 1, has some very useful properties and has been used extensively in economics, not only in the theory.of income distribution, hut also in the theory of the firm and the theory of economic growth.

Reference: accountingtools.com


Sources & references
Risk disclaimer

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >

James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.