The Cobb - Douglas Production Function (UMAP)

A unit that applies calculus to economics and management science. This module develops the Cobb-Douglas Production Function. Students analyze P-K data to estimate parameters and find conditions under which a firm can employ its labor force and capital to maximize its profit. The requisite material on least squares is part of the unit.

Table of Contents:

1. INTRODUCTION
1.1 Background
1.2 Indexes
1.3 The Variables
1.4 The Data

2. THE COBB-DOUGLAS MODEL
2.1 The Assumptions
2.2 The Model
2.3 Returns to Scale
2.4 The Individual Contributions of Capital and Labor

3. ESTIMATION OF THE PARAMETERS
3.1 An Example
3.2 The Cobb-Douglas Parameters

4. AN APPLICATION TO THE THEORY OF THE FIRM

5. REFERENCES

6. ANSWERS TO EXERCISES