Which of the following is true of fixed-proportions production?
A) The inputs used in production have constant marginal products.
B) An increase in the price of an input will lead the firm to substitute away from it.
C) The inputs used in production display diminishing marginal returns.
D) The inputs used in production are perfect complements.
E) The marginal cost of the inputs used in production is fixed.

Question

Quizplus · Accepted Answer

Fixed-proportions production involves inputs that are used in fixed ratios, such that an increase in the quantity of one input requires a corresponding increase in the quantity of another input. This implies that the inputs used in production are perfect complements, as they must be used in fixed proportions. For example, making a sandwich might require one slice of bread and one slice of cheese, such that you cannot make a sandwich with two slices of bread and no cheese.

Which of the Following Is True of Fixed-Proportions Production