The concept of the production function implies that a firm using resources inefficiently will
A) obtain less output than the theoretical production function shows.
B) obtain more output than the theoretical production function shows.
C) obtain exactly the amount that the theoretical production function shows.
D) not be subject to diminishing marginal product.

Question

Quizplus · Accepted Answer

The production function shows the maximum possible output that can be produced with given inputs. If a firm is using its resources inefficiently, it will obtain less output than the theoretical production function shows. This is because the production function assumes all inputs are used efficiently, and if they are not, then output will be lower than what the function predicts.

The Concept of the Production Function Implies That a Firm