A production function measures how an individual maximizes utility.
A)a firm transforms output into input.
B)a firm transforms inputs into output.
C)a firm minimizes cost.

Question

Quizplus · Accepted Answer

A production function is a mathematical relationship that shows the maximum output that can be produced with any given set of inputs. In other words, it measures how a firm transforms inputs (such as labor and capital) into output. This is why B is the best choice. A is incorrect because a firm transforms inputs into output, not the other way around. C is incorrect because a firm may seek to minimize costs, but this is not the primary purpose of a production function.

A Production Function Measures How an Individual Maximizes Utility