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Chapter 20: Q 17. (page 496)

What is an aggregate production function?

Short Answer

Expert verified

The aggregate production function is related to the total output and total amount of labor employed in the economy.

Step by step solution

01

Step 1. The formula of the aggregate production function.

We can use the Cobb-Douglas function to calculate total aggregate production. According to tot this formula the production is equal to real output per input unit times labor input times capital input.

02

Step 2. Explanation

The aggregate production function is defined as the highest output that can be produced by given quantities of the factors of production such as capital-labor and technology.

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