Euler's theorem
Euler's theorem is the mathematical result economists use to show that economic profit must be zero if the production function has constant r eturns to scale and if factors are paid their marginal products.
Definition
According to Macroeconomics by Mankiw (7th edition),
- Euler's theorem. The mathematical result economists use to show that economic profit must be zero if the production function has constant r eturns to scale and if factors are paid their marginal products.