Question

Definition elasticity of substitution in managerial economics

Answer 1

Answer:

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It is measured as the ratio of proportionate change in the relative demand for two goods to the proportionate change in theory relative prices. Elasticity of substitution shows to what degree two goods or services can be substitutes for one another. See also elasticity of technical substitution.

Answer 2

Elasticity of substitution is the elasticity of the ratio of two inputs to a production (or utility) function with respect to the ratio of their marginal products (or utilities).