Homogeneity of Degree Zero

Homogeneity of degree zero is a property of a function where scaling all its input variables by any positive factor does not change the function’s output. In other words, if you multiply every input by the same number, the result remains the same. This concept is common in economics and other fields when analyzing ratios or relative comparisons, such as elasticity, where only the relative sizes matter, not the absolute values. It signifies that the function depends on the inputs only in relation to each other, not their specific magnitudes.