This book provides a microeconomic foundation for productivity and efficiency analysis and demonstrates how one can make statements about productive efficiency even without prior knowledge of the production function. Building on this, the approach of nonparametric frontier function analysis is introduced and expanded through various steps. These steps include the analysis of different forms of variable returns to scale and the determination of the most productive size of a firm. By incorporating price information, allocative inefficiency resulting from misalignment with factor prices can be calculated in addition to technical inefficiency. The extension to dynamic analysis allows for the decomposition of productivity changes into a part that is based on the reduction or increase of inefficient use of production factors, and another part.