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The Cobb–Douglas Production Function

The Cobb–Douglas Production Function

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The Aterm represents Total Factor Produc-tivity (TFP for short); you can think of this as a “quality” factor—as opposed to K and N which are just quantitative. The value of A reflects the state of technology as well as the skill and education level of the workforce. All being well, we’d expect Ato be gradually increasing over time.

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