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What is the intuition behind this?

Let $Y=zF(K,N)$ be a production function. For a profit to exist Indana conditions must hold and :

$$\frac{∂^2zF(K,N^d)}{\partial K \partial N} > 0$$

I understand all the conditions intuitionally, but I can understand this one mathematically but can't understand even what is meant by $\frac{∂^2zF(K,N^d)}{\partial K \partial N} > 0$. What does this being greater than zero imply?

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  • $\begingroup$ What did you mean by "for a profit to exist"? $\endgroup$
    – Paul
    Nov 2, 2016 at 0:48

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It means the impact of changing labour on the marginal product of capital is positive. IE if you increase labour MPK will increase and also if you increase labour MPL will increase.

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