GENERAL KNOWLEDGE

Detailed explanation-1: -The cost-output relationship plays an important role in determining the optimum level of production. Knowledge of the cost-output relation helps the manager in cost control, profit prediction, pricing, promotion etc. The relation between cost and its determinants is technically described as the cost function.

Detailed explanation-2: -The general form of the cost function formula is C(x)=F+V(x) C ( x ) = F + V ( x ) where F is the total fixed costs, V is the variable cost, x is the number of units, and C(x) is the total production cost.

Detailed explanation-3: -(b) Level of Output: There is a direct relationship between output level and cost. More the level of output, more is the cost ( i. e., total cost) and vice Versa. (c) Price of Inputs: There is a direct relationship between price of inputs and cost. As the price of inputs rises, cost rises and vice versa.

Detailed explanation-4: -In simple terms, the input is what goes into the function and the output is what comes out of the function. In the function y = x + 5 y = x + 5, the x is the input variable and the y is the output variable. The function works by taking an input value, x = 3 for example, and producing an output value.