Euler's Theorem

Definition

Euler's homogeneous function theorem

Let f(x, y) to be a homogeneous function of order / degree n, then we have:

Application in economics

For a production function f(L, K) that is constant return to scale, we know it is also homogeneous to degree 1. Thus apply Euler's theorem, we have:

Note

https://mathworld.wolfram.com/EulersHomogeneousFunctionTheorem.html

Example