Elasticity of substitution is
A. The substitution of cheaper inputs for dearer inputs.
B. The rate at which the inputs (labour and capital) are substituted.
C. A measure of the responsiveness of input ratio to a change in input-price ratio.
D. A measure of the responsiveness of input prices and the substitution of the cheaper inputs.
Answer:C
Elasticity of substitution is
A. The substitution of cheaper inputs for dearer inputs. B. The rate at which the inputs (labour and capital) are substituted. C. A measure of the responsiveness of input ratio to a change in input-price ratio. D. A measure of the responsiveness of input prices and the substitution of the cheaper inputs.