If a firm uses a fixed- proportions production technology to produce its final output:
A)the AP of the variable factor is constant.
B)the cost curves are obtained in a similar fashion with the non- fixed- proportion technologies.
C)it will always employ the same amount of the variable factor.
D)the law of diminishing marginal productivity does not apply.

Question

Quizplus · Accepted Answer

With fixed-proportions production technology, the firm must use a fixed ratio of inputs to produce a unit of output. As a result, the firm's cost curves will be different from those of non-fixed-proportions technologies. However, the law of diminishing marginal productivity still applies, and the firm may need to adjust the amount of the variable factor employed as output changes. The AP of the variable factor is not necessarily constant, as it depends on the particular fixed-proportions technology being used.

If a Firm Uses a Fixed- Proportions Production Technology to Produce