Cobb–Douglas production function (柯布-道格拉斯生产函数 kē bù dào gé lā sī shēng chǎn hán shù) is an equation that describes the relationship between inputs and outputs. Usually, only two input factors, labor, and capital are taken into account, and the function describes how much output will be produced by these inputs.
Function: F(K, L) = AKαL1−α
K = capital employed
L = labor employed
A = positive parameter
a = positive elasticity coefficient
Part 1: Breakdown of Words
- “柯布” (kē bù) and “道格拉斯” (dào gé lā sī) are transliteration of “Cobb” and “Douglas”.
- “Production” (生产 shēng chǎn) as in “mass production” (大规模生产 dà guī mó shēng chǎn).
- “Function” (函数 hán shù) as in a “concave function” (凹函数 Āo hán shù).