The Cobb-Douglas Production Function for South Africa Essay -- South A

Introduction For every firm to produce goods it needs inputs much(prenominal) as capital and labour. Mankiw (2005) refers to capital set of tools that workers use in the act upon of production e.g. Machineries such as computers whereas labour refers to the hours that employee invest working. Production die hard refers to the output of a firm, an industry or an entire parsimony for on the whole combination of inputs (Banaeian and Zangeneh, 2001).Economists use production wait on to precise the relationship mingled with labour and capital and according to Mankiw (2005). Production functions reveal the available engine room for transforming labour and capital into output.Tang (2008) highlighted the fact that theory of productivity was proposed by Knut Wicksell in 1851 which contributed a lot towards the works of Charles Cobb and Paul Douglas. Cobb-Douglas production function was developed by Cobb and Douglas in 1928 which is a fundamental function eve now in both Macropolitica l economy and Microeconomics. The Cobb-Douglas production function is normally utilize by economists in the direction of explaining the correlation between contributions of resources involved in production such as labour, capital and technology.Cobb-Douglas production function and regular elasticity of substitution functions are playing a significant office staff for analysis in economics.Cobb-Douglas production function is still universally utilise toward the analysis of productivity and growth (Felipe and Adams, 2005). Felipe and Adam accepted as on-key that Paul Douglas is one of the economists who deserved a Novel Price for his wondrous works. Cobb and Douglas suggested that elasticity of substitution between capital and labour should be unremitting or equals to one even though they did not specify ... ....worldbank.gov. (2011). info on Gross Domestic Product and Total employment of southward Africa. World Bank. http//www.southafricanreservebank.co.za. (2011). Data on Fi xed Capital Stock of southward Africa. South African Reserve Bank Mankiw, NG. (1995). The Growth of the Nations. Brookings paper of economics activities. pp 275-326Mankiw, NG. (2005). Macroeconomics, International edition. Worth Publishers New YorkMankiw, N.G (2013) Principle of Macroeconomics 7th edition. Congage Learning united States of America Romer, P.M. (1986). Increasing returns and long run growth. Journal of political economy Vol 94. Pp 1002-37Romer, P.M. (1990). Capital, Labour and productivity. Journal of political economy Vol. 98, No 5 university of Chicago. Pp 339341Solow, R.M (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics. Pp 65-94