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.