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  Cost and Revenue

Cost and Revenue:

Cost:

The word ‘cost of production’ means expenses incurred in the generation of a commodity. It refers to the net amount of money spent on the generation of a commodity. The determinants of cost of production are: the level of production, the size of plant, the nature of technology employed, the quantity of inputs employed, managerial and labor efficiency. Therefore the cost of production of a commodity is the aggregate of prices paid for the factors of production employed in producing a commodity.

Cost function:

The cost function represents a functional relationship among costs and output which determine it. The cost function symbolically is:

C = f (Q)

Here,
C = Cost
Q = Output

 

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