## What are the properties of Cobb-Douglas production function?

(iv) In the case of C-D

**production function**(8.103), coefficient of partial elasticity of Q w.r.t. a change in L, K remaining constant, would be E^{Q}_{L}= a = constant, and the coefficient of partial elasticity of Q w.r.t. a change in K, L remaining constant, would be E^{Q}_{L}= 1 – α = constant.## What does the Cobb-Douglas production function show?

The

**Cobb**–**Douglas production function**represents the relationship between two or more inputs – typically physical capital and labor – and the number of outputs that can be produced. It’s a commonly used**function**in macroeconomics and forecast**production**.## What are the properties of production function?

The

**production function**shows the output produced by a firm given its inputs. The**production function**displays two important**properties**: positive marginal product and diminishing marginal product.## How do you know if a function is Cobb-Douglas?

**What is a**

**Cobb**–**Douglas Function**?**Functions**. In its simplicity, a CD (**Cobb**–**Douglas**)**function**is just a**function**.- Production
**Functions**. A**Cobb**–**Douglas Function**takes the form of Q=K^{α}L^{β}where Q=output, K=capital, L=labour, and alpha and beta are used to represent input shares of capital and labour respectively. - Returns to Scale.

## How do you solve Cobb-Douglas production function?

The

**Cobb**–**Douglas production function**formula for a single good with two factors of**production**is expressed as following: Y = A * Lᵝ * Kᵅ , this**production function**equation is the basis of our**Cobb**–**Douglas production function**calculator, where: Y is the total**production**or output of goods.## How is demand function derived from Cobb-Douglas?

## Is xy a Cobb-Douglas?

One of the most common is the

**Cobb**–**Douglas**utility function, which has the form u(**x, y**) = x^{a}y^{1}^{–}^{a}. Another common form for utility is the Constant Elasticity of Substitution (CES) utility function.## Are Cobb-Douglas always normal goods?

From these figures you can also see that: (1) demands derived from a

**Cobb**–**Douglas**utility function have no cross-price effects and (2)**good**1 and**good**2 are both**normal goods**for the consumer (and, because of this, both are also**ordinary goods**).## What does Cobb-Douglas preferences mean?

**Cobb**-Douglass

**preferences are**one of the simplest algebraic representations of well-behaved

**preferences**. 2.

**Cobb**–

**Douglas Preferences**. Assume the consumer’s utility function

**is**given by: u x1,x2.

## What does Alpha mean in Cobb-Douglas?

where the output Y is a function of labor (L) and capital (K), A

**is the**total factor productivity and is otherwise a constant, L denotes labor, K denotes capital,**alpha**represents the output elasticity of labor, beta represents the output elasticity of capital, and (**alpha**+ beta = 1) represents the constant returns to## How do you know if preferences are convex?

In two dimensions,

**if**indifference curves are straight lines, then**preferences are convex**, but not strictly**convex**. A utility function is quasi–concave**if**and only**if**the**preferences**represented by that utility function are**convex**.## Are Cobb-Douglas complements or substitutes?

The case of

**Cobb**–**Douglas**preferences is somewhere between the two extremes of perfect**substitutes**and perfect**complements**. You might like to think of this as putting more weight on the quantity of good 2 consumed. This embodies the idea that this individual puts relatively more weight on good 2 than on good 1.## Is Cobb-Douglas a complement?

The

**Cobb**–**Douglas**utility results in constant expenditure shares. When two goods are perfect**complements**, they are consumed proportionately. Perfect**complements**boil down to a single good problem.## How do you know if its complement or substitute?

We

**determine whether**goods are**complements or substitutes**based on cross price elasticity –**if**the cross price elasticity is positive the goods are**substitutes**, and**if**the cross price elasticity are negative the goods are**complements**.## What are perfect substitutes?

A

**perfect substitute**can be used in exactly the same way as the good or service it replaces. This is where the utility of the product or service is pretty much identical. For example, a one-dollar bill is a**perfect substitute**for another dollar bill.## What has close but not perfect substitutes?

Monopolistic competition characterizes an industry in which many firms offer

**products**or services that**are close**,**but not perfect substitutes**. Monopolistic firms**have**little power to set curtail supply or raise prices to increase profits.## Which of the following is the best example of substitute?

Petrol and diesel as a pair of goods is an

**example of substitutes**and other pairs are**examples**of complementary goods.## What are two products that are substitutes?

**Examples of**

**substitute**goods- Coke & Pepsi.
- McDonald’s & Burger King.
- Colgate & Crest (toothpaste)
- Tea & Coffee.
- Butter & Margarine.
- Kindle & Books Printed on Paper.
- Fanta & Crush.
- Potatoes in one Supermarket & Potatoes in another Supermarket.

## Are Coke and Pepsi substitute products?

**Coke and Pepsi**are

**substitutes**because they basically are the same

**product**(not including someone’s preference) if you go somewhere and they don’t have

**Coke**you usually will just take

**Pepsi**. 7-Up and Sprite are also

**substitutes**because if one place doesn’t carry one you will just have the other.

## What are similar products?

**Similar products**are

**products**that perform

**similar**functions but in different contexts or for different purposes. Fans move air and propellers move water. They perform

**similar**functions but in different contexts.

**Similar products**are interesting because they suggest alternative ways to solve the design problem.

David Nilsen is the former editor of Fourth & Sycamore. He is a member of the National Book Critics Circle. You can find more of his writing on his website at davidnilsenwriter.com and follow him on Twitter as @NilsenDavid.