In economics, output elasticity is the percentage change of output (GDP or production of a single firm) divided by the percentage change of an input. It is sometimes called partial output elasticity to clarify that it refers to the change of only one input.[1]
As with every elasticity, this measure is defined locally, i.e. defined at a point.
If the production function contains only one input, then the output elasticity is also an indicator of the degree of returns to scale. If the coefficient of output elasticity is greater than 1, then production is experiencing increasing returns to scale. If the coefficient is less than 1, then production is experiencing decreasing returns to scale. If the coefficient is 1, then production is experiencing constant returns to scale. Note that returns to scale may change as the level of production changes.[2]
A different usage of the term "output elasticity" is defined as the percentage change in output per one percent change in all the inputs.[3] The coefficient of output elasticity can be used to estimate returns to scale.[3]
The mathematical formula is where x represents the inputs and Q, the output.[3] Multi-input-multi-output generalisations also exist in the literature. [4]
^Charnes, A.; Cooper, W. W.; Schinnar, A. P. (1976). "A theorem on homogeneous functions and extended Cobb–Douglas forms". Proc. Natl. Acad. Sci.73 (10): 3747–3748. Bibcode:1976PNAS...73.3747C. doi:10.1073/pnas.73.10.3747. PMC431197. PMID 16592356.
^Perloff (2008). Microeconomics Theory & Applications with Calculus. Pearson. p. 193.
^Zelenyuk, V. (2013) "A Note on Equivalences in Measuring Returns to Scale," International Journal of Business and Economics 12:1, pp. 85-89. and see references therein
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output, elasticity, economics, output, elasticity, percentage, change, output, production, single, firm, divided, percentage, change, input, sometimes, called, partial, output, elasticity, clarify, that, refers, change, only, input, with, every, elasticity, th. In economics output elasticity is the percentage change of output GDP or production of a single firm divided by the percentage change of an input It is sometimes called partial output elasticity to clarify that it refers to the change of only one input 1 As with every elasticity this measure is defined locally i e defined at a point If the production function contains only one input then the output elasticity is also an indicator of the degree of returns to scale If the coefficient of output elasticity is greater than 1 then production is experiencing increasing returns to scale If the coefficient is less than 1 then production is experiencing decreasing returns to scale If the coefficient is 1 then production is experiencing constant returns to scale Note that returns to scale may change as the level of production changes 2 A different usage of the term output elasticity is defined as the percentage change in output per one percent change in all the inputs 3 The coefficient of output elasticity can be used to estimate returns to scale 3 The mathematical formula is E Q Q x x Q displaystyle E Q frac partial Q partial textbf x cdot frac textbf x Q where x represents the inputs and Q the output 3 Multi input multi output generalisations also exist in the literature 4 See also editElasticity economics References edit Charnes A Cooper W W Schinnar A P 1976 A theorem on homogeneous functions and extended Cobb Douglas forms Proc Natl Acad Sci 73 10 3747 3748 Bibcode 1976PNAS 73 3747C doi 10 1073 pnas 73 10 3747 PMC 431197 PMID 16592356 Perloff 2008 Microeconomics Theory amp Applications with Calculus Pearson p 193 a b c Hirschey 2003 p 238 full citation needed Zelenyuk V 2013 A Note on Equivalences in Measuring Returns to Scale International Journal of Business and Economics 12 1 pp 85 89 and see references therein nbsp This economics related article is a stub You can help Wikipedia by expanding it vte Retrieved from https en wikipedia org w index php title Output elasticity amp oldid 1149390649, wikipedia, wiki, book, books, library,
