Production elasticity

In economics, and there in particular in microeconomics , the partial production elasticity is an elasticity that approximately indicates the percentage by which the output (production) of a company or an economy changes when the use of a production factor is increased by one percent. More precisely: it indicates by how much production changes with a marginal change in the input of factors. The sum of the partial production elasticities gives the scale elasticity .

definition

The partial production elasticity is calculated using the following formula:

${\displaystyle \sigma _{i}={\frac {\partial y}{\partial x_{i}}}\cdot {\frac {x_{i}}{y}}}$

with = partial production elasticity of -th input, = production quantity and = input quantity of -th input. ${\displaystyle \sigma _{i}}$ ${\displaystyle i}$ ${\displaystyle y}$ ${\displaystyle x_{i}}$ ${\displaystyle i}$