A firm's production function shows:
A) the maximum level of output the firm can produce for any combination of inputs.
B) the least-cost combination of inputs that can be used to produce a given level of output.
C) the average cost associated with the production of various levels of output.
D) the profit-maximizing level of output that can be produced with a given level of inputs.
E) the marginal cost of producing an extra unit of output by employing an extra unit of an input.

Question

Quizplus · Accepted Answer

A firm's production function shows the maximum level of output the firm can produce for any combination of inputs. This means that it shows the different output levels that can be achieved by varying the input combinations while holding technology constant. The production function does not provide information on costs or profits, or on the specific input combination that would minimize costs for a given output level.

A Firm's Production Function Shows