In a recent issue of this REVIEW, a note by Peter Schmidt (1976) was published that commented on a paper by Dennis Aigner and myself (1968) that appeared in the American Economic Review. Schmidt's paper is interesting and stimulating, and contributes to the understanding of the problems of estimating production functions in some respects. However, some statements made in the article seem to be based on a misunderstanding of our original paper. Therefore, a response is in order to clarify some of the points discussed in his article.