A production function shows
A) How a firm's production increases as it adds more labor.
B) How a firm's costs of production increase as it produces more goods.
C) How production changes as its unit costs go up.
D) How total costs increase as labor is added.

Question

Quizplus · Accepted Answer

A production function shows how a firm's production increases as it adds more labor. It expresses the maximum amount of output that can be obtained from a given amount of inputs, such as labor and capital. As more labor is added, the production function typically exhibits diminishing marginal returns, meaning that each additional input of labor results in a smaller increase in output.

A Production Function Shows