A production function tells the firm
A) the maximum it can expect to produce with a given mix of inputs.
B) the average it can expect to produce with a given mix of inputs.
C) the minimum it can expect to produce with a given mix of inputs.
D) the average level of production for other firms in the industry.

Question

Quizplus · Accepted Answer

A production function describes the maximum amount of output that a firm can produce given a certain combination of inputs such as labor and capital. It shows the maximum potential outputs that can be achieved with a given level of inputs.

A Production Function Tells the Firm