1.6 Economists define the elasticity of substitution as the percentage change in the capital/ labor ratio elicited...

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1.6 Economists define the elasticity of substitution as the percentage change in the capital/ labor ratio elicited by a 1% change in the factor price (wages/ capital costs, for example) ratio.

Would you expect the elasticity of substitution to be positive or negative? What would be the elasticity of substitution of a set of right- angled isoquants? Why?

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The Economics Of Health And Health Care

ISBN: 9781032309866

1st Edition

Authors: Sherman Folland; Allen C. Goodman; Miron Stano; Shooshan Danagoulian

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