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This answer assumes you understand the defining property of homothetic functions, namely, slope of their level curves being equal for a given input ratio. First let's understand what is the diagonal; …
answered Nov 26 '21 by Shaikh Ammar
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I have understood why constant returns to scale imply efficiency locus lying on one side of the diagonal, but not why this does not imply that there are no factor intensity reversals taking place. My …
answered Nov 22 '21 by Shaikh Ammar