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how do i calculate Euler's theorem? 3. Consider the following production function for a firm: 1 2 Q(K,L) = 80K/3L/5 where Q is total output,

how do i calculate Euler's theorem?

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3. Consider the following production function for a firm: 1 2 Q(K,L) = 80K/3L/5 where Q is total output, K is capital and L is labour. a) What degree of homogeneity does the function Q(K,L) have? (3 marks) b) Verify Euler's theorem on homogeneous functions for Q(K,L). (5 marks) 0) Interpret Euler's theorem for Q(K,L). (2 marks) Hint: Euler's theorem is as follows: K + L g = A'Q BK 6L

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