CES Production Function

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CES Production Function

• Y A(aK?(1-a)N?)1/?
• Elasticity of substitution s 1/(1-?)
• As ? ? 0 and s ? 1 function ? Cobb Douglas
• Y AKaN1-a

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CES Production Function

• As ? ? 1 and s ? 8 function ? linear
• Y A(aK(1-a)N)
• As ? ? -8 and s ? 0 function ? Leontief
• Y Amin(Ka,N(1-a))

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