Turn on thread page Beta
    • Thread Starter

    I am currently stuck on a problem. To show that labor is essential i.e. F(K,0)=0 for all finite K>0 (A=0)

    Currently I have


    A = 0 c=1/(AK)=1/K


    F(K,L)/K = 0

    For all L>0, L<Infinity, if F (K,L) doesn't tend to infinity, when K tends to infinity, it is bounded by some finite number


    Lim K-> Infinity F(K,L)/K = 0

    If it does tend to infinity when K tends to infinity, due to L'Hopitals rule and the Inada conditions,

    Lim K-> Infinity F(K,L)/K = Lim K-> F(L) (K,L) = 0

    Due to Constand Returns to Scale, for finite L,

    Lim K-> infinity F(K,L)/K = Lim K-> Infinity F(1, L/K)

    = F(1,0) = 0

    Using CRS again,

    F(K,0) = KF(1,0) = 0

    for all finite K>0. Hence, proving that labor is essential.

    Can you check this for me please?


students online now


Exam discussions

Find your exam discussion here

Should predicted grades be removed from the uni application process

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.