engleski

The Measure of Savings in the Production Process

This paper follows our theoretical research on the elasticity of substitution. We use the results derived to emphasize the new measure of savings in the production process resulting from the substitution of the more expensive production factor with the cheaper one [5]. The results are illustrated numerically due to their importance in empirical studies. Thus we demonstrate the practical application of general and abstract theoretical understanding of the economic savings in the production process and emphasize the didactic value of the paper. Numerical example also serves as the motivation for the new issue of compensating the change in elasticity of substitution with the corresponding change in scale.

Elasticity of substitution; economic costs; economic savings

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