Question

explain what is meant by the issue of a Cobb-Douglas production being similar to a recipe with no steps. How does the Leontief production function deal with this problem? Give a real world example! (Hint: think about the output of an jazz band that produces music, where the inputs are the number of musicians - labor - and the number of instruments - capital.)

Answer 1

convex Tu The cobb- Douglas production function allows for interchange between labor and capital. It represents the typical Isoquant ice. an iso quant in wwich labor and capital can be substituted with one another. it not Perfectly. cobb-Douglas production function is depresented by the following formwa? A aka x ab. whero is the total product, k represents the capital, L stands for units of labor. A is the total tactor productivity, and and b are the ocetpat elasticities of capital and labor respectively, production function is an equation that establishes relationship between the factors of production (ie.' inputs) and total product Cie. output). fixed proportions cano called Leontief production function): units of production function CS Scanned with CamScanner

au the ot ana fixe a proportion (leontief) Production function. The fixed proportion production function is wefiel when labour and capital must be turnished in a fixed proportions, the equation for bixed proportion function follows: @ = min (al, bl) where @ is total product, a and a coefficient pouduction of capital and labour are the respectively and k and L represent the units of Capitou labor respectively. The total product under the fixed proportion pouduction function is restricted by the lower of Labour and capital. eigen lets AlA car wash wwich is open for ls hours each day. It has 3 wash bays and a wookers, 30 mins of worker time and It a wash takes mins of the total number each bay occupancy of washes possible will depend on which factor is the i e. which one runsout limiting factor tirstas 844) mingGG) = 64 min (la rus x3, (as It is because due to lower number of workers available, some wash bays will stay redundant. con oncider car 30 shown below CS Scanned with CamScanner