Consider the following statements:
(A) A production function is defined for a given technology.
(B) If the technology improves, the maximum output obtainable from each input combination increases.
(C) An improvement in technology gives a new production function.
(D) With better technology, the same output needs more inputs than before.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (B) and (C) only
Technology decides the most output that inputs can give.
(A) A production function is defined for a given technology. — Correct. Each production function holds for one level of technology.
(B) If the technology improves, the maximum output obtainable from each input combination increases. — Correct. Better know-how gets more output from the same inputs.
(C) An improvement in technology gives a new production function. — Correct. The input-output relation itself changes.
(D) With better technology, the same output needs more inputs than before. — Incorrect. Since each input combination now gives more output, the same output needs fewer inputs, not more.
NCERT (2026-27): “3.1 Production Function … A production function is defined for a given technology. It is the technological knowledge that determines the maximum levels of output that can be produced using different combinations of inputs. If the technology improves, the maximum levels of output obtainable for different input combinations increase. We then have a new production function.” |