__________ represent the ratio in which the two inputs are combined to produce output.

Factor proportions

The correct answer is Option 1: Factor proportions

• Factor proportions refer to the ratio in which two or more inputs (such as labor and capital) are combined to produce a given level of output.
• This concept is important in production theory and is used to analyze how firms choose the optimal mix of inputs based on cost and productivity.
• Different production technologies may require different factor proportions (e.g., labor-intensive vs. capital-intensive production).