In microeconomic production theory, the relationship between the quantities of inputs used and the quantity of output produced by a firm is called what?

Difficulty: Easy

Correct Answer: Production function

Explanation:


Introduction / Context:
Production theory in microeconomics studies how firms transform inputs such as labour, capital and raw materials into outputs of goods and services. A central concept in this area is the production function, which formally describes the relationship between inputs and output. The terms total product, marginal product and average product refer to specific measurements of output behaviour and are derived from the production function. This question checks whether the learner can correctly name the overall relationship between inputs and output for a firm.


Given Data / Assumptions:
• We are analysing the behaviour of a firm that uses certain inputs to produce output. • The question asks for the term describing the relationship between quantities of inputs and the resulting quantity of output. • Four related concepts are provided as options: marginal product, production function, total product and average product. • The question is conceptual and requires knowledge of definitions.


Concept / Approach:
The production function is a mathematical or conceptual representation of how inputs are combined to produce output. It can be written in a simple form such as Q equals f of L and K, where Q is output, L is labour input, K is capital input and f is the function that captures technology. Total product refers to the total quantity of output produced given particular input levels. Marginal product measures the extra output gained by adding one more unit of an input, holding other inputs constant. Average product is the ratio of total output to the quantity of one input, such as output per worker.


Step-by-Step Solution:
Step 1: Recall the formal definition of a production function as the relationship between input quantities and output quantity under a given technology. Step 2: Recognise that total product is simply the value of output for a particular combination of inputs and does not capture the full relationship over all possible combinations. Step 3: Recall that marginal product is defined as the change in total product when an extra unit of an input is employed, with other inputs fixed. Step 4: Remember that average product is defined as total product divided by the quantity of a specific input. Step 5: Conclude that the only option which refers to the general relationship between inputs and output is the production function.


Verification / Alternative check:
You can verify by thinking of a simple numerical example. Suppose a firm uses units of labour and capital to produce bicycles. If we list the output produced for each different combination of labour and capital, we are effectively describing the production function. Total product at any given combination is just a single value from this list. Marginal and average product are derived by comparing how total product changes as one input changes. This confirms that production function is the overarching concept that best fits the wording of the question.


Why Other Options Are Wrong:
Marginal product focuses only on the additional output associated with small changes in one input, not on the entire mapping from all possible input combinations to output.

Total product gives the total quantity of output for a specific combination of inputs and does not describe how output varies as inputs change systematically.

Average product is a ratio of total output to the quantity of one input and again does not present the full input output relationship that defines the production function.


Common Pitfalls:
Students sometimes confuse the production function with total product because both involve discussions of output. Another pitfall is to believe that marginal product and average product are synonymous with the production function, whereas they are simply additional measures derived from it. Keeping the hierarchy clear, where the production function is the main relationship and other measures are derived from it, helps in answering questions of this kind accurately.


Final Answer:
The relationship between inputs used and output produced by a firm is called the Production function.

Discussion & Comments

No comments yet. Be the first to comment!
Join Discussion