The cost of production
The costs of production
Production
Decisions about production require individual agents to make decisions about the allocation and
use of physical inputs.
· Objectives of agents, technology, availability and quality of inputs determine the nature
of these decisions.
Since the objectives are often pecuniary, it is often necessary to relate the decisions about the
physical units of inputs and outputs to the costs of production.
· If the prices of the inputs and the production relationships are
known (or understood), it is possible to
calculate or estimate all the cost
relationships for each level of output.
In ...