Cost Output Relationship in the Short Run
Cost Output Relationship in the Short Run The relation between the cost and output is technically described as the “Cost Function”. Cost function can be stated as follows: C= f[Q,W,F,T] Where C= Cost Q= Amount of production W= prices of factors of production F= Productivities of factors of production T= Improvements in techniques of production These are also called the determinants of the cost of production. Short-run cost production function: Short-run is a period of time within which the firm can vary its output by varying only the quantity of variable inputs such as labor, and raw materials while fixed inputs like plant, machinery, etc, remain constant. As the quantity of variable inputs is...