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What is the elasticity of substitution, o, of the CES production function below?
d
q= (alP + bkP)
Assume d and p are positive constants and 0<a<1 and 0 <b<1. Also assume capital is measured on the vertical
axis and labor on the horizontal axis.
The elasticity of substitution is
(Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts.
E.g., a fraction can be created with the / character.)
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Transcribed Image Text

What is the elasticity of substitution, o, of the CES production function below? d q= (alP + bkP) Assume d and p are positive constants and 0<a<1 and 0 <b<1. Also assume capital is measured on the vertical axis and labor on the horizontal axis. The elasticity of substitution is (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a fraction can be created with the / character.)