The elasticity of substitution is a measure of
A) the percentage change in the demand for a good that results from a given percentage change in its price
B) how easy it is to substitute one input for another in producing a given level of output
C) how much output decreases when inputs are increased by a fixed multiple λ

Question

Quizplus · Accepted Answer

The elasticity of substitution measures how easily one input can be substituted for another in production, while maintaining the same level of output. It is not directly related to the demand for a good or the change in output resulting from an increase in inputs by a fixed multiple.

The Elasticity of Substitution Is a Measure of