A variable- proportions production function is one in which:
A)increasing the use of an input requires decreasing another by the same amount.
B)more of one input can be substituted for less of another.
C)isoquants are smooth.
D)inputs are perfect substitutes.

Question

Quizplus · Accepted Answer

A variable-proportions production function allows for substitutions between inputs where more of one input can be used in place of less of another. This is reflected in the smooth isoquants of the production function. Option A describes a fixed proportions production function where inputs must be used in exact proportions. Option D describes a case of perfect substitution where any amount of one input can be replaced by an equivalent amount of another input.

A Variable- Proportions Production Function Is One in Which