ELASTICITY OF PRODUCTION

  elasticity of production, also called the output

elasticity, is the percentage change in production
divided the percentage change in the quantity of
an input used for that production. For example, if
a firm increases the number of workers by 10%,
and the number of products produced per month
increases by 20%, the elasticity of production
will be: 
 Elasticity of Production = 20% / 10% = 2
 It is also called the partial output elasticity,
because it refers to the change in the output when
only one output change (that is, it’s the partial
derivate of the production function, as opposed to
the total derivative).
 If the production function has only one input, the
elasticity of production measures the degree of
returns to scale, but usually, production function
has more than one input.
 The elasticity of production is a measure of the
responsiveness of the production function to the
change in one input.
 The quantity supplied depends on several factors.
Some of the more important factors are the price
of the good or service, the cost of the input and
the technology of production.


Movement along the supply: when the price

increases, the quantity supplied decreases