Timeline for Production function and elasticity
Current License: CC BY-SA 4.0
10 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Dec 23, 2020 at 18:14 | vote | accept | CommunityBot | ||
| Dec 23, 2020 at 18:07 | comment | added | Konstantin | Glad to hear! Wanna accept the answer? as a means of reciprocating the courtesy? | |
| Dec 23, 2020 at 18:00 | comment | added | user31331 | I got a hint that elasticity might not even play a role. I was having trouble with what is even wanted since the question was extremly unclear. But I guess this is just the quick and dirty approach but either way what you said makes total sense to me. | |
| Dec 23, 2020 at 17:55 | comment | added | Konstantin | well, if no one is asking for a proof, you totally should use the properties of Cobb-Douglas function. If you have a Cobb-Douglas function $x_1^\alpha x_2^\beta x_3^\gamma ...$ with $\alpha+\beta+\gamma + .. = 1$ then the total production cost is allocated between factors in proportion $\alpha : \beta : \gamma : ...$. Elasticity from the first part does not play any role here. | |
| Dec 23, 2020 at 17:39 | comment | added | user31331 | Found this for better explanation of what I mean; Kevin Clinton, September 2004, "A useful production function: Cobb-Douglas". His second paragraph explains what I mean and thus that $MP_1(x_1)$ would give the usage of that input relative to all the usage. This is what I think is intended here. (the pdf is just a copy paste on google and should pop right up). | |
| Dec 23, 2020 at 17:36 | comment | added | Konstantin | MP, if you mean marginal product, is measured in real terms, units of output per units of factor. If you multiply this amount by $x_1$ you get something measured in units of output. Cost and spending on the other hand is always measured in monetary units, so you lack a price (that of the final product). It might be that in a certain problem the price is equal to 1, so you make no mistake in math, but it is better to pay due to the accounting logic. | |
| Dec 23, 2020 at 17:12 | comment | added | user31331 | $MP$ of $x_1$ that is | |
| Dec 23, 2020 at 17:10 | comment | added | user31331 | I found the $MP$ and multiplied it by $x_1$ to aquire the total cost which gave me $\alpha \cdot y$ and thus the total factor used is just $\alpha$. Is this not correct and much faster? | |
| Dec 23, 2020 at 6:38 | history | edited | Konstantin | CC BY-SA 4.0 |
typo
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| Dec 23, 2020 at 5:22 | history | answered | Konstantin | CC BY-SA 4.0 |