Making a production function.

  1. Explain what is meant by a production function.
  2. Distinguish between returns to scale and returns to a factor.
  3. Create a graphical analysis of the cost-minimizing input mix and explain how it
    is affected by changes in relative prices of inputs.
  4. Define and describe the relationship among total, marginal, and average costs.
  5. Describe the connection between production and cost functions.
  6. Distinguish between short- and long-run costs curves.
  7. Define fixed and variable costs and their role in decision making.
  8. Explain long-run costs, sources of economies and diseconomies of scale and
    scope, and the notion of minimum efficient scale.
  9. Explain why MR = MC at the profit maximizing output.
  10. Understand how many units of a factor (such as labor) a firm should purchase
    at different factor prices.