1. What is production? Does production always result in some tangible output? Explain.

2. What is a firm? Give two examples of firms.

3. According to economic theory, what is the firm's objective? Mention three other objectives that firms might pursue.

4. How are profits calculated?

5. Distinguish between technical efficiency and economic efficiency.

6. Define economic efficiency ratio (EER).

7. Use words to express how an economic efficiency ratio is calculated.

8. What is the difference between the items in each of the following pairs of concepts?

a) Fixed factors and variable factors

b) The short run and the long run

a) Fixed factors are those that the firm cannot change during the period of analysis; variable factors are those that it can change.