<p>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. </p>

CC BY-SA 3.0
2016-11-01T23:48:52.430Z
2016-11-01T23:48:52.430Z
MHall
<p>What is the intuition behind this?</p>

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

<p>$$\frac{∂^2zF(K,N^d)}{\partial K \partial N} &gt; 0$$</p>

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

CC BY-SA 3.0
2016-11-02T00:48:03.123Z
What did you mean by "for a profit to exist"?
Paul
<macroeconomics><optimization><profit-maximization>
What does this condition for a profit of a firm exist mean?
Kuantew
# What does this condition for a profit of a firm exist mean?

(Asked by: username_0 on 2016-11-01)

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?

**Tags:** macroeconomics, optimization, profit-maximization

> **Comments:**
> **username_1**: What did you mean by "for a profit to exist"?  

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## 1 answers

### Answer by username_2 on 2016-11-01. Score: 1 | Accepted answer

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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