Economics · Production Theory

In the Clark-Wicksteed-Walras Product Exhaustion Theorem, factor payments are shown to exactly exhaust total output under a linearly homogeneous (CRS) production function. Consider: A. Euler's theorem is the mathematical basis: for Q = f(K, L) homogeneous of degree 1: Q = (∂Q/∂L)·L + (∂Q/∂K)·K = MPL·L + MPK·K. B. If each factor earns its marginal product, then MPL·L + MPK·K = Q (total output is exhausted). C. The theorem requires increasing returns to scale for product exhaustion to hold. D. Under decreasing returns to scale, paying each factor its marginal product leads to less than full product exhaustion (a residual exists). E. The theorem holds for ALL production functions regardless of returns to scale. Which statements are CORRECT?