What is translog production function?
The translog production function is an approximation of the CES function by a second-order Taylor polynomial in the variable about. , i.e. the Cobb–Douglas case. The name translog stands for ‘transcendental logarithmic’.
What is the fixed coefficient production function?
A production function that describes a process which requires inputs to be combined in fixed proportions. The key economic feature is that a fixed coefficient production function does not allow one factor to be substituted for another when there is a change in the relative prices of inputs.
What is the form of Cobb-Douglas production function?
The formula for this form is: Q = f(L, K), in which labor and capital are the two factors of production with the greatest impact on the quantity of output.
What is meant by Law of Return?
The law of returns to scale explains the proportional change in output with respect to proportional change in inputs. In other words, the law of returns to scale states when there are a proportionate change in the amounts of inputs, the behavior of output also changes.
What is meant by fixed proportion?
Fixed proportions means that there is a fixed ratio between volumes of outputs and specific inputs.
What is linear isoquant?
A linear isoquant implies that either factor can be used in proportion. If isoquant has several linear segments separated by kinks, the isoquant is called kinked isoquant or activity analysis isoquant or linear programming isoquant. Such isoquants are used in linear programming.
What is the importance of Cobb-Douglas production function?
Importance of Cobb Douglas Production Function: The concept of production function is an important one. 3) It is also useful for understanding the returns to scale. 4 ) It is also useful for understanding the nature of costs of production. 5) It is also useful for understanding the isoquant curves.
What are the important properties of Cobb-Douglas production function?
The powers of labor and capital (that are β and α) in the C-D production function measure output elasticities of labor (L) and capital (K) respectively. The output elasticity of a factor shows the percentage change in output due to a given percentage change in the number of factor inputs.