This chapter showed how to specify and estimate a popular form of production and cost functions: the cubic specification. We discussed how to use the results of the estimations to investigate a variety of production and cost issues that are relevant to managerial decision making, such as finding the point of diminishing returns and estimating the values of marginal products and marginal costs.

This chapter concludes Part III of this text, which discussed production and cost. Now that both revenue and cost relations have been presented, we are ready to proceed with the analysis of managerial decision making in the context of a profit-maximizing firm.