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Which one of the following is false regarding "cost functions? Select one a A cost function expresses a firm's cost in terms of the output it produces b Variable cost is a firm's cast associated with the variable inputs it uses in its production process c
Which one of the following is false regarding "cost functions? Select one a A cost function expresses a firm's cost in terms of the output it produces b Variable cost is a firm's cast associated with the variable inputs it uses in its production process c. Implicit cost is that component of a firm's costassociated with all inputs used in its production process d. Fixed cost is a fir's cost associated with the fixed inputs it uses in its production process e. Explicit cost is that component of a firm's cost associated with the nonowner-supplied inputs used in its production process
Expert Solution
Generally the cost function of the firm is expressed in terms of output. Therefore, the first statement is true.
Total cost = Fixed cost + Variable Cost.
Fixed cost is associated with the cost that incurs due to uses of fixed input.
Variable cost is associated with the uses of variable input in the production function.
Explicit cost is direct cost that incurs to the firm. Implicit cost is the indirect cost.
Option C is false.
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