What does a firm's production function show?
A)The production function indicates the maximum level of output the firm can produce for any combination of inputs.
B)The production function shows the least-cost combination of inputs that can be used to produce a given level of output.
C)The production function shows the average cost associated with the production of various levels of output.
D)The production function shows the profit-maximizing level of output that can be produced with a given level of inputs.
E)The production function shows the marginal cost of producing an extra unit of output by employing an extra unit of an input.

Question

Quizplus · Accepted Answer

The production function shows the maximum level of output that a firm can produce for any combination of inputs. It shows the relationship between inputs and outputs, and allows firms to determine the most efficient way to produce a given level of output. It does not show the cost or profit-maximizing level of output. Marginal cost is a concept separate from the production function.

What Does a Firm's Production Function Show