| production function | a descriptive relation that links input with output |
| returns to scale | the relation between output and the proportional variation of all inputs taken together. |
| return to a factor | the relation between output and the variation in a single input holding other inputs fixed. |
| law of diminishing returns | the marginal product of a variable factor eventually will decline as its use is increased. |
| isoquant | displays all possible ways to produce a given quantity. shows all input combinations that produce the same quantity assuming efficient production. |
| isocost lines | displays all combinations of inputs that cost the same |
| substitution effect | the price of an input increases, the firm will reduce its use of this input and increase its use of other inputs. |
| cost curves | depicts the relation between total costs and output |
| marginal cost | the change in total costs associated with a one-unit change in output. |
| minimum efficient scale | defined as that plant size at which long-run average cost first reaches its minimum point. |
| learning curves | displays the relation between average cost for a given output period. |
| economies of scope | exist when the cost of producing a set of products jointly within one firm is less than the cost of producing a set of products separately across independent firms. |
| operating curves | short run cost curves, because they are used in making near tear production and pricing decisions. |
| planning curves | long term cost curves as they play a key role in longer run planning decisions relating to plant size and equipment acquisitions. |
