6.1 The Technology of Production Theory of the firm-Explanation of how a firm makes cost-minimizing production decisions and how its cost varies with its output. Factors of production-Inputs into the production process (e.g.,labor,capital,and materials). A production function describes the maximum output a firm can produce for each specified combination of inputs. Q=FK,L)6.1 The Technology of Production ❑ Theory of the firm-Explanation of how a firm makes cost-minimizing production decisions and how its cost varies with its output. ❑ Factors of production-Inputs into the production process (e.g., labor, capital, and materials). ❑ A production function describes the maximum output a firm can produce for each specified combination of inputs. Q = F(K, L)