This established standard work on production and cost theory, previously known as "Production I," comprehensively conveys the fundamentals and advanced approaches that are essential for a sound economic analysis of manufacturing processes. Following an introductory overview and classification of the material, the author develops various production functions from activity analysis. These are supplemented by technical, stochastic, dynamic, and empirical considerations. On this basis, the author builds the cost-theoretical approaches for deriving cost functions. Another focus is on the operational adjustment processes in production. Additionally, the new edition has been expanded to include Data Envelopment Analysis (DEA) as well as topics such as environmental protection, service production, and the rationality of inefficiency.