Question
In the Constant Elasticity of Substitution (CES)
production function, the value of the elasticity of substitution (Ļ) typically lies within which of the following ranges?Solution
This elasticity remains constant along an isoquant , which is the defining feature of the CES function. Range of the Elasticity of Substitution Depending on the value of the substitution parameter (Ļ), the elasticity of substitution (Ļ) can take any non-negative value , as explained below: Ā 
Conclusion Since the CES production function encompasses all possible degrees of substitutability āranging from no substitution to perfect substitutionāthe elasticity of substitution can lie anywhere between 0 and infinity. Therefore, the correct range is: 
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