Question

Briefly explain the concept of the cost function.

Answer 1

Answer:

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 costof production given a specific quantity produced.

Answer 2

Concept of the cost function:  

A ‘cost function’ is a method of determining the manner in which the expenses of production will change at different levels of output levels. Which means it establishes the ‘total cost of production’ when a specific quantity of output is produced.  

Economists use this method for determining different stages of production which helps to predict what the total cost would be to produce a product at different levels of output. This helps the management of the organization to work on their budgets.