“The Cobb Douglas function exhibits constant marginal product of capital but diminishing marginal productivity of capital”
Can someone explain this? I thought that the cobb douglas shows that output increases at a decreasing rate, so why is marginal product of capital constant in this sentence?
Also, what are the main differences
I like the question and would as well appreciate an answer!
I wrote an article on the Cobb-Douglas function that covers this: http://financialexamhelp123.com/cobb-douglas-production-function/.
In a nutshell, it means that if total factor productivity remains constant, increasing both capital and labor by a given percentage will increase output by that same percentage.