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Let There is Cobb Douglas Function, Perfect Competition, Elasticity of labor and capital is same, Constant rate to return in production. K*=?,L*=?

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Question ajoutée par Wasif Mehmood
Date de publication: 2016/02/11

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Sultan Alghamdi
par Sultan Alghamdi

The Cobb-Douglas functional is a form of production functions usually used to show the relationship of an output to input. 

the function is P(L,K) = bL^*K^B

 

P is total production

L is labor input

K is capital input

b= total factor productivity 

* is output elasticity of labor 

B is output elasticity of capital

 

The production function has constant returns to scale. That is, if L and K are each increased by

%, then P increases by%

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