What is cost and cost function?
Consequently, what is the meaning of cost function?
Definition: A cost function is a mathematical formula used to used to chart how production expenses will change at different output levels. In other words, it estimates the total cost of production given a specific quantity produced.
Beside above, what is the formula of cost? The formula to calculate total cost is the following: TC (total cost) = TFC (total fixed cost) + TVC (total variable cost).
Thereof, what is the average cost function?
To find the average cost, you will simply divide the total cost by the total number of units produced. To find the marginal cost, you will find the total cost for the unit and subtract from it the total cost for producing one fewer units. Now let's see how you would actually use the function.
What are the different cost functions?
Types of Cost Functions Typical cost functions are either linear, quadratic and cubic. Total cost function is the most fundamental output-cost relationship because functions for other costs such as variable cost, average variable cost and marginal cost, etc.