Cost of Production

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COST OF PRODUCTION CONTENTS 1. Introduction

2. Types of costs 3.1 Opportunity, implicit and explicit costs 3.2 Fixed and variable costs 3.3 Average costs

3. Types of cost curves 4.4 Marginal cost curve 4.5 Average cost curves

4. Costs in Short run and in the Long run 5.6 Short run 5.7 Long run 5.8 Economies of scale

5. Cost analysis in the real world 6.9 Economies of scope 6.10 Experiential learning & technological advances 6.11 Many dimensions 6.12 Unmeasured costs
6. Conclusion

SUMMARY
REFERENCES

LIST OF TABLES
Table 1 – Various measures of cost

LIST OF FIGURES
Figure 1 – Fixed cost
Figure 2 – Variable cost
Figure 3 – Types of cost curves
Figure 4 – Short run & long run average total cost curves
Figure 5 – Minimum efficient scale of production

SUMMARY

This study examines the different types of costs such as opportunity, implicit, explicit, fixed, variable and average costs that a firm would incur in order to carry out the production process. It talks about different types of cost curves to understand various measures of cost and establish a relationship between the changing patterns of different cost curves. It also tells how costs vary significantly in the long run and in the short run and how it effects the firms’ production and pricing decisions. Apart from the standard model, it also tells about the real world scenario in which the situations are even more complex than that of a text book. IT emphasizes the ground for economies of scale and economies of scope. It gives an overall picture of knick – knacks one has to possess in order to enter the market scene.

1. INTRODUCTION
The cost incurred to make goods and services is called the Cost of Production. What would



References: * Colander, David C. (2004). Economics (5th edition), McGraw Hill companies. * Mankiw N.G. (2003). Principles of economics (3rd edition), ISBN.

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