production elasticity

Production elasticity measures how sensitive the amount of goods produced is to a change in input, like labor or raw materials. For example, if a small increase in input results in a large increase in output, production is considered elastic. Conversely, if output changes little despite input changes, production is inelastic. This concept helps businesses understand how efficiently they can increase or decrease production in response to resource adjustments, aiding in decision-making for scaling operations and managing costs.