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Questions tagged [elasticity-of-substitution]

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Simultaneously a substitute and a complement (validity of a claim)

I have read the following claim: Sometimes the relationship between products can be both substitute and complement; that is, two products may be complements for one purpose but substitutes for ...
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Second order partial derivative and cross second-order partial derivative

I'm following a paper (Full text available here!) where at some point (pag.17 and 20) the author get the following derivative: $$\frac{\partial V}{\partial L}=Y-X\frac{dY}{dX}=\alpha X^{-\frac{c}{b}}...
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substitution effect in slutsky equation

We know Slutsky equation decomposes the price effect into substitution effect and income effect, where the substitution effect is the partial derivative of Hicksian demand function against the change ...
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Why does the price of firewood from Ardennes forests rise when the price of natural gas from the North Sea rises?

I have an exam question from last year that I don't understand. I have to explain this : why does the price of firewood from Ardennes forests rise when the price of natural gas from the North Sea ...
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relation between elasticity of substituion and mrts

elasticity of substituion has been defined as the as the percentage change in capital labour ratio given change in mrts. but mrts itself tries to explain how a change in labour results in a change in ...
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Elasticity of substitution for 3 and more goods (interpretation)

Elasticity of substitution for 3 and more goods (interpretation) Hello everyone, I have a problem regarding the understanding of how would the elasticity of substitution work in the case of function ...
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Elasticity of substitution between leisure in two periods

This is a basic question, but I am new to macro models. The question is from Romer's text. Assume a household only has one member and has no initial wealth, and the household lives for two periods. ...
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Interpretation: Elasticitity of Substitution [closed]

I have this production function: $$P(x_1,x_2)=x_1+x_1*x_2$$ I am trying to find the elasticity of substitution, and I found this: $$\sigma = -\frac{d \ln (\frac{x_2}{x_1})}{d \ln(\frac{x_1}{1+x_2})}...
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How do find elasticity of substitution for this function

The motive of my post is in search of some help in order to understand the correct way to find the elasticity of substitution by means of calculating the following function. $$f(K, L)=\frac{K^{2}L^{...
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