If you are running a winery and you need one bottle for every 750ml of wine, then your production function
A)is inefficient.
B)is considered "fixed-proportion."
C)will have a diminishing marginal rate of technical substitution.
D)has downward-sloping, straight line isoquants.

Question

Quizplus · Accepted Answer

A fixed-proportion production function means that the inputs (in this case, bottles) are always used in a constant ratio to the output (wine) without any substitution possibilities. Therefore, one bottle for every 750ml of wine indicates a fixed-proportion production function.

If You Are Running a Winery and You Need One