Leontief production function

The Leontief production function, named after Wassily Leontief, is a type (type B) of the micro-economic production function. It is called a linear limitational because the factors of production in a fixed relationship to each other and in a fixed ratio to the output (output) of a plant or a plant stand. The output quantity reaches a limitation when a factor of production is not sufficiently available.

In formal notation applies to the function

The Leontief production function is a CES production function with elasticity of substitution 0 It is homogeneous with homogeneity of degree r.

Example

Each ' recipe moderate ' production in the kitchen or in the laboratory is an example of the Leontief production function. Do we need, for example, for a cake according to recipe eggs, flour and a liter of milk, so you can produce with eggs, flour and liters of milk cake. Limitational in this case, the eggs, 6 eggs would have been able to produce 3 cakes.

The production function is the basis of input-output analysis.