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Homework Help: Economics: Elasticity of substitution between capital and labor

  1. Aug 9, 2012 #1
    1. The problem statement, all variables and given/known data
    Am I right or wrong on the following?

    The more capital is needed to replace one unit of labor to attain the same production level, the lower the elasticity of substitution between capital and labor.

    It can measure how productive the capital in question is, and/or how much has been invested given the condition of diminishing returns.

    This is the way I understood this concept. However, I'm not completely sure that my understanding of it is right. If it isn't, please tell me.

    2. Relevant equations

    3. The attempt at a solution
  2. jcsd
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