Tag Archives | Substitution Production Function

In this article we will discuss about the constant elasticity of substitution production function. Elasticity of Substitution: One of the limitations of Cobb-Douglas production function is the unitary elasticity of substitution between labour and capital. This is a rigid assumption of Cobb-Douglas production function. "The elasticity of substitution in the Cobb-Donglas Production Function is unity" can be proved below. The [...]