elasticity of production

Elasticity of production refers to how the output of a business changes in response to changes in the quantity of inputs, like labor or materials. If a small increase in input leads to a large increase in output, production is considered elastic. Conversely, if increasing inputs results in a minimal rise in output, it's inelastic. This concept helps businesses understand how effectively they can scale production and respond to changes in demand or resource availability, guiding decisions about hiring, resource allocation, and investment.