After reading this chapter, students should be able to:

• Describe various types of cost and the characteristics of each.
• Identify a firm's least-cost input choice, and the firm's cost function, in the short- and long-run.
• Understand the concepts of average and marginal cost.
• Describe the effect of an input price change on the firm's least-cost input combination.
• Explain the relationship between short-run and long-run cost with one or more variable inputs.
• Define economies and diseconomies of scale and explain their relationship to the concept of returns to scale.