The degree of homogeneity is a key characteristic of a homogeneous function. A multivariable function \( f(x, y) \) is homogeneous of degree \( n \) if, when all input variables are multiplied by a scalar \( t \), the function itself is multiplied by \( t^n \). For example, if \( f(tx, ty) = t^n f(x, y) \), then the function is homogeneous of degree \( n \).
- In the context of our example, the function \( f(x, y) = \frac{x^2 y^2}{\sqrt{x^2 + y^2}} \) is homogeneous.
- By substituting \( tx \) and \( ty \) into the function, we derive \( f(tx, ty) = \frac{(t^2 x^2)(t^2 y^2)}{\sqrt{t^2 x^2 + t^2 y^2}} = \frac{t^4 x^2 y^2}{t \sqrt{x^2 + y^2}} = t^3 f(x, y) \).
- Thus, the function is homogeneous of degree \( 3 \) as shown by the symmetry and scale behavior observed in the final expression \( t^3 f(x, y) \).
Determining the degree of homogeneity is crucial in contexts such as economics, where functions often represent production outputs and understanding their scale dependencies lets economists predict outcomes under varying input conditions.