Which of the following statement/statements are true?
Statement 1: If the technology improves, we have a new production function.
Statement 2: Production function deals with inefficient use of inputs.

Statement 1 is true and Statement 2 is false

The correct answer is option 3: Statement 1 is true and Statement 2 is false

Explanation:

1. Statement 1: If the technology improves, we have a new production function. (True)

   • The production function represents the relationship between inputs and maximum possible output under a given state of technology.
   • If technology improves, firms can produce more output with the same inputs, leading to a new production function with higher productivity.
   • This shift reflects technological progress, such as better machinery or improved production techniques.

2. Statement 2: Production function deals with inefficient use of inputs. (False)

   • The production function assumes efficient use of inputs, meaning all resources are utilized optimally to maximize output.
   • Inefficiency (e.g., wastage, underutilization) is not part of the production function but rather an issue of poor management or external constraints.