Prove Eulers theorem that, if ( L , K ) is homogeneous of degree(see Exercise 5.7),
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Prove Euler’s theorem that, if ƒ(L, K) is homogeneous of degree γ (see Exercise 5.7), then L(∂ƒ/∂L) + K(∂f/∂K) = γƒ(L, K). Given this result, what can you conclude if a production function has constant returns to scale? Express your results in terms of the marginal products of labor and capital.
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Microeconomics Theory and Applications with Calculus
ISBN: 978-0133019933
3rd edition
Authors: Jeffrey M. Perloff
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