Which of the following statements is NOT correct?

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → In the production function q = f(L, K), q is the minimum output that can be produced with L and K.

In q = f(L, K), q is the maximum output that can be produced with L and K, not the minimum.

Option (1) In the production function q = f(L, K), q is the minimum output that can be produced with L and K. — False. q is the maximum output for the given L and K.

Option (2) The output of a firm can be consumed by consumers or used by other firms for further production. — True. A tailor’s shirts go to consumers, and a firm’s output may also be an input of another firm.

Option (3) The inputs that a firm uses in the production process are called factors of production. — True. This is what factors of production means.

Option (4) To produce output, a firm may require any number of different inputs. — True. Labour and capital are only the two inputs taken for simplicity.

NCERT (2026-27): “A Firm Effort In the previous chapter, we have discussed the behaviour of the consumers. In this chapter as well as in the next, we shall examine the behaviour of a producer. Production is the process by which inputs are transformed into ‘output’. Production is carried out by producers or firms. A firm acquires different inputs like labour, machines, land, raw materials etc. It uses these inputs to produce output. This output can be consumed by consumers, or used by other firms for further production. For example, a tailor uses a sewing machine, cloth, thread and his own labour to ‘produce’ shirts. A farmer uses his land, labour, a tractor, seed, fertilizer, water etc to produce wheat. …”

“3.1 Production Function … The inputs that a firm uses in the production process are called factors of production. In order to produce output, a firm may require any number of different inputs. However, for the time being, here we consider a firm that produces output using only two factors of production – labour and capital. Our production function, therefore, tells us the maximum quantity of output (q) that can be produced by using different combinations of these two factors of productionsLabour (L) and Capital (K). We may write the production function as q = f(L,K) where, L is labour and K is capital and q is the maximum output that can be produced.”