By the end of this chapter, you should understand:

1. a production function
2. technology and a technique of production
3. how the choice of technique depends on input prices
4. total, average and marginal cost, in the long run and short run
5. returns to scale, and their relation to average cost curves
6. fixed and variable factors in the short run
7. the law of diminishing returns
8. how a firm chooses output, in the long run and short run.