I don't understand its importance in this production function.

I know that the productivity parameter is A in the function: F(K;L)=AK^α L^(1-α)

So what could it be?

Thank you!

  • 2
    $\begingroup$ Please clarify your specific problem or provide additional details to highlight exactly what you need. As it's currently written, it's hard to tell exactly what you're asking. $\endgroup$
    – Giskard
    Sep 8, 2022 at 7:08

1 Answer 1


The parameter $A$ typically refers to total factor productivity which is a measure of how much output is created per unit of input.

If you rearrange your equation you can see this more clearly:


Naturally as $A$ grows so will your output. In "words", $A$ measures the portion of your production that $K^aL^{1-a}$ does not explain.

  • 1
    $\begingroup$ Hi, thankyou for your answer! However, I don't think that A corresponds to the marginal productivity of a factor. Am I wrong? $\endgroup$
    – student
    Sep 8, 2022 at 14:14

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