* Law of diminishing marginal product = property whereby the marginal product of an input declines as the quantity of the input increases * Slope of production function (quantity of input vs. quantity of output) = marginal product * Graph become “flatter” as marginal product decreases (see graph) * Total cost curve = graph w/ quantity produced on x-axis and total cost on y-axis * Graph becomes “steeper” as quantity of output increases (see graph) * Fixed costs = costs that do not vary with quantity of output produced * i.e. rent of factory, bookkeeper’s salary etc.