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en:linear-production-function [2014/04/04 07:37] 200.123.218.241 [Elasticity of substitution] |
en:linear-production-function [2017/04/11 10:36] federico |
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| ====== Linear Production Function ====== | ====== Linear Production Function ====== | ||
| - | The linear production function describes a linear relationship between the inputs and the output. | + | The linear [[en:production-function|production function]] describes a linear relationship between the inputs and the output. |
| For example: | For example: | ||
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| - | The linear production function has constant returns to scale. | + | The linear production function has constant [[returns to scale]]. |
| **Proof**:\\ | **Proof**:\\ | ||
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| Proof: | Proof: | ||
| - | The elasticity of substitution is the change in K/L divided the change in the MTRS, when K/L changes. | + | The [[elasticity of substitution]] is the change in K/L divided the change in the MTRS, when K/L changes. |
| The MTRS is constant. The change in the MTRS is always 0. | The MTRS is constant. The change in the MTRS is always 0. | ||
| Line 39: | Line 39: | ||
| The elasticity of substitution is ∞. | The elasticity of substitution is ∞. | ||
| + | [[Proof of The Law of Cosines]] | ||