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It shows that the Cobb Douglas function has to be meaningful in a units-of-measurement sense given the underlying assumptions.

Douglas is a linear homogeneous production function, which implies, that the factors of production can be substituted for one another up to a certain extent only. Can exhibit constant, increasing, or decreasing returns to scale Show Result Related MCQs Which of the following is not an element of fiscal policy. Definition: The Cobb-Douglas Production Function, given by Charles W. Second, by perceiving the Cobb Douglas function as the solution of differential equations, the paper sheds some light on the "dimension and economics" discussion. A Cobb-Douglas production function: Exhibits constant returns to scale. Thereby this paper gives a simple mathematical argument for perceiving the Cobb Douglas function as a mathematical consequence of assumptions, rather then assuming an ad hoc analytical form of the production function. Furthermore one classroom-friendly derivation is provided. This paper provides two interesting aspects: First it supplies two relatively simple derivations of the Cobb Douglas function given the before-mentioned set of (partial) differential equations. The well-known Cobb-Douglas production function is amazingly useful in clarifying that growth rates are the sum of three factors: the labor force growth rate, the capital growth rate and the Total Factor Productivity (TFP) growth rate, which is measured as a residual after the labor and capital growth rates have been subtracted from the total economic growth rate. Although the Cobb Douglas function is very popular, there exists a discussion in the literature if its analytical form makes sense from a dimensional point of view. Some of these properties describe a set of (partial) differential equations. Its popularity in economics stems from certain convenient mathematical properties. The Cobb Douglas production function is a central element in economic growth theory and Microeconomics.