A production function describes
A)how a firm maximizes profits.
B)how a firm turns inputs into output.
C)the minimal cost of producing a given level of output.
D)the relationship between cost and output.

Question

Quizplus · Accepted Answer

A production function is a mathematical equation that shows how inputs (such as labor, capital, and materials) are combined to produce a certain amount of output. It describes the technical relationship between inputs and outputs, and is used by firms to make decisions about how much to produce and what combination of inputs to use. It does not directly relate to profit maximization or cost minimization, but rather focuses on the relationship between inputs and output.

A Production Function Describes