Who is cobb douglas

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Recruiter Advice. All Advice. Research Institute. Offer does not apply to e-Collections and exclusions of select titles may apply. Offer expires December 31, Browse Titles. What is Cobb-Douglas Production Function 1. A particular widely used form of production function , which posits that firm output in a particular time period is an exponential function of the capital and the labour employed in this period. It views infrastructure as an input that determines economic growth.

Find more terms and definitions using our Dictionary Search. On the other hand, inputs like machines, entrepreneurship, etc. As output increases due to the use of indivisible factors to their maximum capacity, per unit cost falls.

Thus when the supply of inputs is scarce and indivisibilities are present, constant returns to scale are not possible. Whenever the units of different inputs are increased in the production process, economies of scale and specialization lead to increasing returns to scale. In practice, however, no entrepreneur will like to increase the various units of inputs in order to have a proportionate increase in output.

His endeavour is to have more than proportionate increase in output, though diminishing returns to scale are also not ruled out. The C-D production function is based on the assumption of substitutability of factors and neglects the complementarity of factors. This function is based on the assumption of perfect competition in the factor market which is unrealistic.

One of the weaknesses of C-D function is the aggregation problem. This problem arises when this function is applied to every firm in an industry and to the entire industry. In this situation, there will be many production functions of low or high aggregation. Thus the C-D function does not measure what it aims at measuring. Thus the practicability of the C-D production function in the manufacturing industry is a doubtful proposition.

This is not applicable to agriculture where for intensive cultivation, increasing the quantities of inputs will not raise output proportionately. Even then, it cannot be denied that constant returns to scale are a stage in the life of a firm, industry or economy.

It is another thing that this stage may come after some time and for a short while. It has been used widely in empirical studies of manufacturing industries and in inter-industry comparisons. Its parameters a and b represent elasticity coefficients that are used for inter-sectoral comparisons.