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Question
Briefly explain the concept of the cost function.
Solution
The functional relationship between the cost of production and the output is called the cost function. It is expressed as
C = f(Qx)
Where,
C = Cost of production
Qx = Units of output x produced
In other words, the output-cost relationship for a firm is depicted by the cost function.
The cost function depicts the least cost combination of inputs associated with different output levels.
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| 3 | ... | 54 | ... | ... |
| 4 | 30 | ... | 54 | ... |
| 5 | ... | ... | ... | ... |
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