Search results
Results from the WOW.Com Content Network
Paul Douglas explained that his first formulation of the Cobb–Douglas production function was developed in 1927; when seeking a functional form to relate estimates he had calculated for workers and capital, he spoke with mathematician and colleague Charles Cobb, who suggested a function of the form Y = AL β K 1−β, previously used by Knut Wicksell, Philip Wicksteed, and Léon Walras ...
Other forms include the constant elasticity of substitution production function (CES), which is a generalized form of the Cobb–Douglas function, and the quadratic production function. The best form of the equation to use and the values of the parameters ( a 0 , … , a n {\displaystyle a_{0},\dots ,a_{n}} ) vary from company to company and ...
The production functions are understood and formulated differently in growth accounting and management accounting. In growth accounting the production function is formulated as a function OUTPUT=F (INPUT), which formulation leads to maximize the average productivity ratio OUTPUT/INPUT.
This is a list of production functions that have been used in the economics literature. Production functions are a key part of modelling national output and national income . For a much more extensive discussion of various types of production functions and their properties, their relationships and origin, see Chambers (1988) [ 1 ] and Sickles ...
As in microeconomics supply and demand models, first-order conditions that the derivative of this function with respect to capital and labor will be zero at the functions maximum. Thus (assuming P = 1 ) we can calculate the wages and the rental rate of capital:
The production function is a graphical or mathematical expression showing the relationship between the inputs used in production and the output achieved. Both graphical and mathematical expressions are presented and demonstrated. The production function is a simple description of the mechanism of income generation in production process.
Suppose an open economy has the production function: = (,) = (), = / Where the variables in this equation are: is the total output (,) is the production function; is the total capital stock; is the total labor stock
where A is the output in arable production, F is the output in fish production, and K, L are capital and labor in both cases. In this example, the marginal return to an extra unit of capital is higher in the fishing industry, assuming units of fish (F) and arable output (A) have equal value. The more capital-abundant country may gain by ...