Today's Question
A production function shows the relationship between inputs (like labor and capital) and outputs. Some inputs are 'perfect substitutes' (you can swap one for another freely), while others are 'perfect complements' (you need them in fixed proportions). Think of a call center: Is one experienced worker a perfect substitute for two inexperienced workers? What about a taxi service - is a driver without a car useful?
Model Answer
Perfect substitutes: In a call center, experienced workers might roughly substitute for inexperienced ones (though not perfectly - quality differs). Perfect complements: A taxi driver without a car produces zero rides. You need BOTH the driver AND the car together - having 10 drivers but only 1 car means only 1 taxi can operate. This is why production functions matter: they tell us how flexible input combinations can be.
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