Page 84 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.70, # 1, 2013, pp. 77-96

respectively. , .

“Expenses- 0 1, and are the quantities of
Output“ capital (K) and labour (L) for
(Leontyev) or production of one unit of the
production.
, .

The analysis 0 1 n- quantity of production
tools for tools, - the intensity level
production of the tool, r=1,2,...,n.
activity - the production level
when intensity is equal to 1.,
r=1,2,...,n. and -r-the
quantity of capital (K) and

labour (L) expenses for unit
intensity of the tool.

Constant –scale ratio ( ), -
elasticity of allocation ratio, - the decree
substitution of homogeneity ( ), –
(CES)
substitution elasticity ( )
characteristic ratio ( ).

The constant elasticity of substitution (CES) function ( ), combines

the first tree functions:

1) if  -1, the CES functions turns into the linear function ( =);

2) if 0, the CES functions turns into the Cobb-Douglas function (=1);

3) if , the CES functions turns into the “expense-output” production

function (=0).

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