A production function is said to be homogeneous of degree if f(xL, xK) = x f(L,
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A production function is said to be homogeneous of degree γ if f(xL, xK) = xγ
f(L, K), where x is a positive constant. That is, the production function has the same returns to scale for every combination of inputs. For such a production function, show that the marginal product of labor and marginal product of capital functions are homogeneous of degree
γ - 1. M
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Related Book For
Microeconomics Theory And Applications With Calculus
ISBN: 9780133019933
3rd Edition
Authors: Jeffrey M. Perloff
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