Asked by: Deolinda Gilahasked in category: General Last Updated: 21st March, 2020
What is the relationship between production and cost?
Also to know is, what is the relationship between production and cost function?
We derive the cost function from the production function, the prices of the inputs, and the target output. For a Leontief production function, the cost function is simply the sum of the cost of the inputs (quantity of each input times the price of that input) required to product the target output.
Similarly, what is the difference between cost and production? Production costs reflect all of the expenses associated with a company conducting its business while manufacturing costs represent only the expenses necessary to make the product. Both of these figures are used to evaluate the total expenses of operating a manufacturing business.
In this manner, what is the relationship between average product and average cost?
Therefore, AVC is inversely related to AP, i.e., when AP increases, AVC decreases. When AP is maximum, AVC attains its minimum point and when AP decreases, AVC increases.
Relationship between average variable cost and average product.
|Marginal Product||Marginal Cost|
|At maximum||At minimum|
What is the relationship between total cost and marginal cost?
Answer: Total cost is the total cost incurred for producing a commodity. It is arrived when Total fixed cost and Total variable cost are added together. Marginal cost refers to an additional cost incurred to produce an additional unit of a commodity.